UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number:
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) |
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(IRS Employer Identification No.) |
(Address of principal executive offices, including zip code)
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(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading symbol |
Name of each exchange on which registered |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of July 29, 2022,
TABLE OF CONTENTS
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Item 1. |
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Condensed Consolidated Balance Sheets as of June 30, 2022 and March 31, 2022 |
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Condensed Consolidated Statements of Operations for the three months ended June 30, 2022 and 2021 |
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Condensed Consolidated Statements of Cash Flows for the three months ended June 30, 2022 and 2021 |
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Notes to Condensed Consolidated Financial Statements (unaudited) |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
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Item 4. |
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Item 1. |
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Item 1A. |
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Item 2. |
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Item 3. |
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Item 4. |
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Item 5. |
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Item 6. |
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EXPLANATORY NOTES
Pending Trademarks and Registered Marks
Throughout this quarterly report on Form 10-Q (“this Report”), we refer to various trademarks, service marks and trade names that we use in our business. Abiomed, Impella, Impella 2.5, Impella 5.0, Impella LD, Impella CP, Impella RP, Impella 5.5, Impella Connect, and SmartAssist are registered trademarks of Abiomed, Inc., and are registered in the U.S. and certain foreign countries. Impella ECP, Impella BTR, CVAD STUDY, STEMI DTU, Automated Impella Controller, Abiomed Breethe OXY-1 System and preCARDIA are pending trademarks of ABIOMED, Inc. Other trademarks and service marks appearing in this Report are the property of their respective holders.
Company References
Throughout this Report, unless the context otherwise requires, “ABIOMED, Inc.,” the “Company,” “we,” “us” and “our” refer to ABIOMED, Inc. and its consolidated subsidiaries.
Where You Can Find More Information
We make available, free of charge on our website located at www.abiomed.com, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports, as soon as reasonably practicable after filing such reports with or furnishing such reports to the U.S. Securities and Exchange Commission (“SEC”). We also use our website for the distribution of Company information. The information we post on our website may be deemed to be material information. Accordingly, investors should monitor our website, in addition to following our press releases, SEC reports and other filings and public conference calls and webcasts. The contents of our website are not incorporated by reference into this Report.
2
PART I. FINANCIAL INFORMATION
ITEM 1: Condensed Consolidated Financial Statements
ABIOMED, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (Unaudited)
(in thousands)
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June 30, 2022 |
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March 31, 2022 |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Short-term marketable securities |
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Accounts receivable, net |
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Inventories, net |
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Prepaid expenses and other current assets |
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Total current assets |
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Long-term marketable securities |
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Property and equipment, net |
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Goodwill |
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Other intangibles, net |
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Deferred tax assets |
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Other assets |
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Total assets |
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$ |
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$ |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Accrued expenses |
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Deferred revenue |
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Other current liabilities |
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Total current liabilities |
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Other long-term liabilities |
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Contingent consideration |
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Deferred tax liabilities |
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Total liabilities |
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and contingencies (Note 15) |
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Stockholders' equity: |
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Class B Preferred Stock, $ |
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Common stock, $ |
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Additional paid in capital |
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Retained earnings |
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Treasury stock at cost - |
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Accumulated other comprehensive loss |
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Total stockholders' equity |
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Total liabilities and stockholders' equity |
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$ |
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$ |
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The accompanying notes are an integral part of the condensed consolidated financial statements (unaudited)
3
ABIOMED, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations (Unaudited)
(in thousands, except per share data)
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For the Three Months Ended June 30, |
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2022 |
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2021 |
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Revenue |
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$ |
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$ |
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Cost of revenue and operating expenses: |
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Cost of revenue |
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Research and development |
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Selling, general and administrative |
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Acquired in-process research and development |
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Income (loss) from operations |
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Interest and other income, net |
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Income (loss) before income taxes |
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Income tax provision |
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Net income (loss) |
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$ |
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$ |
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Net income (loss) per share - basic |
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$ |
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$ |
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Weighted average shares outstanding - basic |
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Net income (loss) per share - diluted |
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$ |
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$ |
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Weighted average shares outstanding - diluted |
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The accompanying notes are an integral part of the condensed consolidated financial statements (unaudited)
4
ABIOMED, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)
(in thousands)
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For the Three Months Ended June 30, |
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2022 |
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2021 |
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Net income (loss) |
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$ |
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$ |
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Other comprehensive loss: |
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Foreign currency translation (losses) gains |
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Unrealized losses on derivative instrument |
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Net unrealized losses on marketable securities, net of tax |
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Other comprehensive loss |
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Comprehensive income (loss) |
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$ |
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$ |
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The accompanying notes are an integral part of the condensed consolidated financial statements (unaudited)
5
ABIOMED, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)
(in thousands, except share data)
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Common Stock |
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Treasury Stock |
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Additional Paid |
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Retained |
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Accumulated Other |
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Total Stockholders' |
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Shares |
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Par value |
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Shares |
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Amount |
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in Capital |
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Earnings |
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Comprehensive Loss |
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Equity |
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Balance, March 31, 2022 |
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Restricted stock units issued |
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Stock options exercised |
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Return of common stock to pay withholding taxes on restricted stock units |
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( |
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( |
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( |
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( |
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Stock-based compensation expense |
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Stock repurchase program |
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( |
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( |
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( |
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( |
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Other comprehensive loss |
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Net income |
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Balance, June 30, 2022 |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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Common Stock |
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Treasury Stock |
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Additional Paid |
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Retained |
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Accumulated Other |
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Total Stockholders' |
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Shares |
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Par value |
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Shares |
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Amount |
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in Capital |
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Earnings |
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Comprehensive Loss |
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Equity |
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Balance, March 31, 2021 |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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Restricted stock units issued |
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— |
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Stock options exercised |
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Return of common stock to pay withholding taxes on restricted stock units |
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( |
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( |
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Stock-based compensation expense |
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Other comprehensive loss |
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Net loss |
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Balance, June 30, 2021 |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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The accompanying notes are an integral part of the condensed consolidated financial statements (unaudited)
6
ABIOMED, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
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For the Three Months Ended June 30, |
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2022 |
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2021 |
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Operating activities: |
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Net income (loss) |
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$ |
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$ |
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Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
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Depreciation and amortization |
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Acquired in-process research & development |
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Bad debt expense (recoveries) |
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Stock-based compensation |
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Write-down of inventory and other |
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Accretion on marketable securities |
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Change in fair value of other investments |
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Gain on previously held interest in preCARDIA |
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Deferred tax provision |
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Change in fair value of contingent consideration |
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Other non-cash operating activities |
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Changes in assets and liabilities: |
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Accounts receivable |
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Inventories |
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( |
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( |
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Prepaid expenses and other assets |
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Accounts payable |
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( |
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Accrued expenses and other liabilities |
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Deferred revenue |
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Net cash provided by operating activities |
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Investing activities: |
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Purchases of marketable securities |
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Proceeds from the sale and maturity of marketable securities and other |
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Purchases of other investments |
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Acquisition of preCARDIA, net of cash acquired |
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( |
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Purchases of property and equipment |
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( |
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Net cash provided by (used for) investing activities |
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Financing activities: |
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Proceeds from the exercise of stock options |
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Taxes paid related to net share settlement upon vesting of stock awards |
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( |
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( |
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Repurchase of common stock |
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( |
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Net cash used for financing activities |
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( |
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( |
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Effect of exchange rate changes on cash and cash equivalents |
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( |
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Net increase (decrease) in cash and cash equivalents |
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( |
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Cash and cash equivalents at beginning of period |
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Cash and cash equivalents at end of period |
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$ |
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$ |
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Supplemental disclosure of cash flow information: |
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Cash paid for income taxes, net of refunds |
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$ |
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$ |
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Supplemental disclosure of non-cash activities: |
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Property and equipment in accounts payable and accrued expenses |
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Right-of-use assets obtained in exchange for lease liabilities |
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The accompanying notes are an integral part of the condensed consolidated financial statements (unaudited)
7
ABIOMED, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(In thousands, except share data)
Note 1. Nature of Operations
ABIOMED, Inc. (the “Company” or “ABIOMED”) is a leading provider of medical technology that provides circulatory support and oxygenation. The Company's products are designed to enable the heart to rest by improving blood flow and/or performing the pumping of the heart. The Company’s products are used in the cardiac catheterization lab, or cath lab, by interventional cardiologists and in the heart surgery suite by cardiac surgeons for patients who are in need of hemodynamic support prophylactically or emergently before, during or after angioplasty or heart surgery procedures.
Note 2. Basis of Presentation and Summary of Significant Accounting Policies
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles, or GAAP, for interim financial reporting as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”) and in accordance with Article 10 of Regulation S-X. Accordingly, they do not include all of the information and note disclosures required by GAAP for complete financial statements. These statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2022 that has been filed with the SEC.
In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all normal and recurring adjustments that are necessary for a fair presentation of results for the interim periods presented. The results of operations for any interim period may not be indicative of results for the full fiscal year or any other subsequent period. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results may differ from these estimates.
There have been no changes in the Company’s significant accounting policies for the three months ended June 30, 2022 as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2022 that has been filed with the SEC.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results may differ from these estimates.
COVID-19 Pandemic
The Company is subject to additional risks and uncertainties as a result of the ongoing novel coronavirus (“COVID-19”) pandemic. Since March 2020, the ongoing COVID-19 pandemic has adversely impacted and is likely to further adversely impact the Company’s business and markets, including the Company’s workforce and the operations of its customers, suppliers, and business partners. While the COVID-19 (including new variants of COVID-19) pandemic remains fluid and continues to evolve differently across various geographies, the Company believes it is likely to continue to experience variable impacts on its business.
To ensure the health and safety of its global employees, the Company continues to offer onsite COVID-19 testing and vaccinations in order to maintain a safe working environment. The Company’s proactive testing and vaccination programs have reduced exposure with early detection and enabled its manufacturing facilities to operate at full capacity.
The depth and extent to which the COVID-19 pandemic may directly or indirectly impact the Company’s business, results of operations, financial condition and individual markets is dependent upon various factors, including the spread of additional variants; the availability of vaccinations, personal protective equipment, intensive care unit (“ICU”) and operating room capacity, and medical staff; and government interventions to reduce the spread of the virus. When COVID-19 infection rates spike in a particular region, the Company’s patient utilization volumes have generally been negatively impacted as hospitals face capacity limitations, staffing shortages and some in-patient treatments have been deferred.
While patient utilization increased in the first quarter of fiscal year 2023, sales were impacted by slower than expected improvements in hospital staffing shortages. The Company continues to closely monitor the impact of COVID-19 on all aspects of its business and geographies, including any impact on the Company’s customers, including the ongoing hospital labor shortages, employees, suppliers, vendors, business partners and distribution channels, as well as on procedures and the demand for its products by keeping apprised of local, regional, and global COVID-19 surges (including new variants of the virus).
While the Company cannot reliably estimate the extent to which the COVID-19 pandemic may impact patient utilization and revenues of its products, the Company's focus is to increase patient utilization of its Impella devices. As of the date of issuance of
these financial statements, the extent to which the COVID-19 pandemic may materially adversely affect the Company’s financial condition, liquidity or results of operations is uncertain.
8
Recently Adopted Accounting Pronouncements
In November 2021, the FASB issued ASU 2021-10, “Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance” an amendment focused on increasing transparency of government assistance including the disclosure of (1) the types of assistance, (2) an entity’s accounting for the assistance, and (3) the effect of the assistance on an entity’s financial statements. The Company adopted ASU 2021-10 as of April 1, 2022, on a prospective basis, and the adoption did not have a material impact on the Company’s condensed consolidated financial statements.
Recently Issued Accounting Pronouncements Not Yet Effective
No new accounting pronouncements issued or effective during the period had, or are expected to have, a material impact on the consolidated financial statements.
Note 3. Acquisitions
Acquisition of preCARDIA, Inc.
The Company acquired
The Company acquired preCARDIA for a purchase price of $
In connection with the acquisition, the Company acquired net assets of $
Note 4. Net Income (Loss) Per Share
Basic net income (loss) per share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share is computed using the treasury stock method by dividing net income by the weighted average number of dilutive common shares outstanding during the period. Diluted shares outstanding is calculated by adding to the weighted average shares outstanding any potential dilutive securities outstanding for the period. Potential dilutive securities include stock options, restricted stock units, performance-based stock awards and shares to be purchased under the Company’s employee stock purchase plan.
For purposes of the diluted net income (loss) per share calculation, potential dilutive securities are excluded from the calculation if their effect would be anti-dilutive. As such, basic and diluted net loss per share are the same for periods with a net loss.
The Company’s basic and diluted net income (loss) per share were as follows:
|
|
For the Three Months Ended June 30, |
|
|||||
|
|
2022 |
|
|
2021 |
|
||
Net income (loss) per share – basic |
|
(in thousands, except per share data) |
|
|||||
Net income (loss) |
|
$ |
|
|
$ |
( |
) |
|
|
|
|
|
|
|
|
||
Weighted average shares – basic |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Net income (loss) per share – basic |
|
$ |
|
|
$ |
( |
) |
|
9
|
|
For the Three Months Ended June 30, |
|
|||||
|
|
2022 |
|
|
2021 |
|
||
Net income (loss) per share – diluted |
|
(in thousands, except per share data) |
|
|||||
Net income (loss) |
|
$ |
|
|
|
( |
) |
|
|
|
|
|
|
|
|
||
Weighted average shares – basic |
|
|
|
|
|
|
||
Effect of dilutive securities |
|
|
|
|
|
— |
|
|
Weighted average shares – diluted |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Net income (loss) per share – diluted |
|
$ |
|
|
$ |
( |
) |
|
For the three months ended June 30, 2022 and 2021, approximately
Note 5. Revenue Recognition
Revenue is recognized when, or as, obligations under the terms of a contract are satisfied, which occurs when control of the promised products or services is transferred to customers. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products or services to a customer.
Product revenue is generally recognized when the customer obtains control of the Company’s product, which occurs at a point in time, and may be upon shipment or upon delivery based on the contractual shipping terms of a contract.
Service revenue is generally recognized over time as the services are rendered to the customer based on the extent of progress towards completion of the performance obligation. The Company recognizes service revenue over the term of the service contract. Services are expected to be transferred to the customer throughout the term of the contract and the Company believes recognizing revenue ratably over the term of the contract best depicts the transfer of value to the customer. Revenue generated from preventative maintenance calls is recognized at a point in time when the services are provided to the customer.
Revenue from the sale of products and services are evidenced by either a contract with the customer or a valid purchase order and an invoice which includes all relevant terms of sale and shipment of product or service provided has been incurred. The Company performs a review of each specific customer's credit worthiness and ability to pay prior to acceptance as a customer. Further, the Company performs periodic reviews of its customers' creditworthiness prospectively.
Disaggregation of Revenue
Revenue is disaggregated from contracts between product revenue and service and other revenue and by geography, which the Company believes best depicts how the nature, amount, timing, and uncertainty of revenues and cash flows are affected by economic factors. The Company generally sells its products and services through a direct sales force in the U.S. and Germany and through direct sales and distribution agreements in other international markets outside the U.S. (e.g., Japan, Europe, Canada, Latin America, Asia-Pacific, Middle East).
The following table disaggregates the Company’s revenue by products and services:
|
|
For the Three Months Ended June 30, |
|
|||||
|
|
2022 |
|
|
2021 |
|
||
|
|
(in thousands) |
|
|||||
Product revenue |
|
$ |
|
|
$ |
|
||
Service and other revenue |
|
|
|
|
|
|
||
Total revenue |
|
$ |
|
|
$ |
|
||
10
The following table disaggregates the Company’s revenue by geographic location:
|
|
For the Three Months Ended June 30, |
|
|||||
|
|
2022 |
|
|
2021 |
|
||
|
|
(in thousands) |
|
|||||
United States |
|
$ |
|
|
$ |
|
||
Europe |
|
|
|
|
|
|
||
Japan |
|
|
|
|
|
|
||
Rest of world |
|
|
|
|
|
|
||
Outside the U.S. |
|
|
|
|
|
|
||
Total revenue |
|
$ |
|
|
$ |
|
||
Variable Consideration
Returns Reserve
The Company estimates an allowance for future sales returns based on historical return experience, which requires judgment. The Company estimates the amount of its product sales that may be returned by its customers and records this estimate as a reduction of revenue in the period the related product revenue is recognized. The Company estimates product return liabilities using the expected value method based on its historical sales information and other factors that it believes could significantly impact its expected returns. The Company’s returns reserve was not material as of June 30, 2022 and March 31, 2022.
Rebates and Discounts
The Company provides certain customers with rebates and discounts that are defined in the Company’s contractual arrangements with customers and are recorded as a reduction of revenue in the period the related revenue is recognized with a corresponding liability recorded and included in accrued expenses in the accompanying condensed consolidated balance sheets. Rebates normally result from performance-based offers that are primarily based on attaining contractually specified sales volumes as well as product usage. Discounts are normally from early payment incentives. The Company estimates the amount of rebates and discounts based on an estimate of the third-party’s sales and the respective rebate or discount defined in the customer contractual arrangement.
Contract Balances
Contract balances represent amounts presented in the condensed consolidated balance sheets when either the Company has transferred goods or services to the customer, or the customer has paid consideration to the Company under the contract. These contract balances include trade accounts receivable and deferred revenue.
Deferred Revenue
The Company’s deferred revenue balance was $
Costs to Obtain or Fulfill a Customer Contract
The Company has certain costs to obtain and fulfill a customer contract, such as commissions and shipping costs. The Company recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets that the Company otherwise would have recognized is one year or less. The Company accounts for shipping and handling activities related to contracts with customers as costs to fulfill the promise to transfer the associated products. These costs are included in selling, general, and administrative expenses.
11
Note 6. Financial Instruments
Cash Equivalents and Marketable Securities
The Company’s cash equivalents and marketable securities at June 30, 2022 and March 31, 2022 are invested in the following:
|
|
Amortized |
|
|
Gross |
|
|
Gross |
|
|
Fair Market |
|
||||
|
|
Cost |
|
|
Gains |
|
|
Losses |
|
|
Value |
|
||||
June 30, 2022 |
|
(in thousands) |
|
|||||||||||||
Money market funds |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Commercial paper |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Total cash equivalents |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Short-term U.S. Treasury mutual fund securities |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Short-term government-backed securities |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Short-term corporate debt securities |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Short-term commercial paper |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Total short-term marketable securities |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Long-term U.S. Treasury mutual fund securities |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Long-term government-backed securities |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Long-term corporate debt securities |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Total long-term marketable securities |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Total cash equivalents and marketable securities |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
|
|
Amortized |
|
|
Gross |
|
|
Gross |
|
|
Fair Market |
|
||||
|
|
Cost |
|
|
Gains |
|
|
Losses |
|
|
Value |
|
||||
March 31, 2022: |
|
(in thousands) |
|
|||||||||||||
Money market funds |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Commercial paper |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Total cash equivalents |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Short-term U.S. Treasury mutual fund securities |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Short-term government-backed securities |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Short-term corporate debt securities |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Short-term commercial paper |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Total short-term marketable securities |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Long-term U.S. Treasury mutual fund securities |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Long-term government-backed securities |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Long-term corporate debt securities |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Total long-term marketable securities |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Total cash equivalents and marketable securities |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
Gross realized gains and losses on sales of marketable securities were not material for the three months ended June 30, 2022 and 2021.
The securities that the Company invests in are generally deemed to be low risk based on their credit ratings from the major rating agencies. The longer the duration of these securities, the more susceptible they are to changes in market interest rates and bond yields. As interest rates increase, those securities purchased at a lower yield show a mark-to-market unrealized loss. Unrealized losses as of June 30, 2022 are primarily due to changes in interest rates and credit spreads. Accordingly, the Company has not recorded an allowance for credit losses. No marketable securities have been in a continuous material unrealized loss position for greater than twelve months as of June 30, 2022.
12
Derivative Instruments
In October 2019, the Company entered into an intercompany agreement in which it loaned
The following table summarizes the terms of the cross-currency swap agreement as of June 30, 2022 (amounts in thousands):
|
|
|
|
|
|
|
|
|
|
|
Effective Date |
|
Maturity |
|
Fixed Rate |
|
Aggregate Notional Amount |
|
|
Pay EUR |
|
|
|
|
EUR |
|
|||
Receive U.S.$ |
|
|
|
|
|
|
USD |
|
|
The following table presents the fair value of the cross-currency swap (amounts in thousands):
Derivatives designated as hedging instruments under ASC 815 |
|
Balance Sheet classification |
|
June 30, 2022 |
|
|
March 31, 2022 |
|
||
Cross-currency swap |
|
Other assets (other long-term liabilities) |
|
$ |
|
|
$ |
( |
) |
|
The Company has structured its cross-currency swap agreement to be 100% effective and, as a result, there was no net impact to earnings resulting from hedge ineffectiveness. The change in fair value of the cross-currency swap during the three months ended June 30, 2022 was mainly due to fluctuations in the Euro to the U.S. dollar exchange rates.
For the three months ended June 30, 2022 and 2021, the Company recorded income related to the interest rate differential of the cross-currency swap of $
Fair Value Hierarchy
Fair value is defined as the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three categories:
Level 1 primarily consists of financial instruments whose values are based on quoted market prices such as exchange-traded instruments and listed equities.
Level 2 includes financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including time value, yield curve, volatility factors, prepayment speeds, default rates, loss severity, current market and contractual prices for the underlying financial instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace.
Level 3 is comprised of unobservable inputs that are supported by little or no market activity. Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flows or similar techniques and at least one significant model assumption or input is unobservable.
13
The following tables present the Company’s assets and liabilities measured at fair value on a recurring basis:
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
June 30, 2022: |
|
(in thousands) |
|
|||||||||||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Money market funds |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
||
Commercial paper |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Short-term U.S. Treasury mutual fund securities |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Short-term government-backed securities |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Short-term corporate debt securities |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Short-term commercial paper |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Long-term U.S. Treasury mutual fund securities |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Long-term government-backed securities |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Long-term corporate debt securities |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Investment in Shockwave Medical |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Cross-currency swap agreement |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Contingent consideration |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
March 31, 2022: |
|
(in thousands) |
|
|||||||||||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Money market funds |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
||
Commercial paper |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Short-term U.S. Treasury mutual fund securities |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Short-term government-backed securities |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Short-term corporate debt securities |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Short-term commercial paper |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Long-term U.S. Treasury mutual fund securities |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Long-term government-backed securities |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Long-term corporate debt securities |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Investment in Shockwave Medical |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cross-currency swap agreement |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Contingent consideration |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
The Company has determined that the estimated fair value of its money market funds and its investment in Shockwave Medical, a publicly traded medical device company, are reported as Level 1 financial assets as they are valued at quoted market prices in active markets. The investment in Shockwave Medical is classified within other assets in the condensed consolidated balance sheets.
The Company has determined that the estimated fair value of its commercial paper, U.S. Treasury mutual fund securities, government-backed securities, corporate debt securities and cross-currency swap agreement are reported as Level 2 financial assets and liabilities as they are based on model-driven valuations in which all significant inputs are observable, or can be derived from or corroborated by observable market data for substantially the full term of the asset or liability.
The Company evaluates transfers between fair value levels at the end of each reporting period. There were no transfers of assets or liabilities between fair value levels during the three months ended June 30, 2022.
Level 3 Assets and Liabilities
Other Investments
The Company periodically makes investments in medical device companies that focus on heart failure and heart pumps and other medical device technologies. The Company measures these equity investments at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment. The Company monitors any events or changes in circumstances that may have a significant effect on the fair value of investments, either due to impairment or based on observable price changes and records adjustments as needed.
14
The Company’s other investments are classified as a Level 3 assets and are not included in the fair value table above.
|
|
|
|
|
|
|
(in thousands) |
|
|
Balance, March 31, 2022 |
|
$ |
|
|
Additions |
|
|
|
|
Change in fair value, net |
|
|
|
|
Balance, June 30, 2022 |
|
$ |
|
|
Change in fair value, net represents upward and downward adjustments due to observable price changes and related foreign currency fluctuations, which are reflected within interest and other income, net in the Company's condensed consolidated statements of operations.
Contingent Consideration
Contingent consideration represents potential milestones that the Company may pay as additional consideration related to the acquisition of ECP Entwicklungsgesellschaft mbH (“ECP”) in July 2014 and the acquisition of Breethe in April 2020. Changes in fair value of contingent consideration are reflected within research and development expenses in the Company’s condensed consolidated statements of operations. There is no assurance that any of the conditions for the milestone payments will be met.
The components of contingent consideration are as follows:
|
|
June 30, 2022 |
|
|
March 31, 2022 |
|
||
|
|
(in thousands) |
|
|||||
ECP |
|
$ |
|
|
$ |
|
||
Breethe |
|
|
|
|
|
|
||
Total contingent consideration |
|
$ |
|
|
$ |
|
||
ECP
In July 2014, the Company acquired ECP and AIS GmbH Aachen Innovative Solutions (“AIS”) for $
The Company uses a combination of an income approach, based on various revenue and cost assumptions and the application of a probability to each outcome, and a Monte-Carlo valuation model, both of which consider significant unobservable inputs. As it relates to the CE Mark approval milestone, probabilities were applied to each potential scenario and the resulting values were discounted using a rate that considers weighted average cost of capital as well as a specific risk premium associated with the riskiness of the earn out itself, the related projections, and the overall business. The revenue-based milestone is valued using a Monte-Carlo valuation model, which simulates estimated future revenues during the earn out-period using management’s best estimates.
Key unobservable inputs include the discount rate used to present value the projected revenues and cash flows (ranging from
Breethe
In April 2020, the Company acquired Breethe for $
The Company uses a combination of an income approach, based on various revenue and cost assumptions and the application of a probability to each outcome, and a Monte-Carlo valuation model, both of which consider significant unobservable inputs. As it relates to the regulatory milestones, probabilities were applied to each potential scenario and the resulting values were discounted using a rate that considers weighted average cost of capital as well as a specific risk premium associated with the riskiness of the earn out itself, the related projections, and the overall business. The commercial milestones are valued using a Monte-Carlo valuation model, which simulates estimated future revenues during the earn out-period using management’s best estimates.
15
Key unobservable inputs include the discount rates used to present value the projected revenues and cash flows (ranging from
Contingent consideration is classified as a Level 3 liability as the estimated fair value of the contingent consideration related to the acquisitions of ECP and Breethe require significant management judgment or estimation.
The following table summarizes the change in fair value, as determined by Level 3 inputs of the contingent consideration for the three months ended June 30, 2022:
|
|
|
|
|
|
|
(in thousands) |
|
|
Balance, March 31, 2022 |
$ |
|
||
Change in fair value |
|
( |
) |
|
Balance, June 30, 2022 |
$ |
|
||
The change in fair value of the contingent consideration was primarily due to estimates related to development timelines and the passage of time on the fair value measurement of milestones.
The significant unobservable inputs used in the fair value of the Company’s contingent consideration are the discount rate and forecasted financial information, including the probability of achievement. Significant increases (decreases) in the discount rate would have resulted in a significantly lower (higher) fair value measurement. Significant increases (decreases) in the forecasted financial information would have resulted in a significantly higher (lower) fair value measurement. As of June 30, 2022 and March 31, 2022, the present value of expected payments related to the Company’s contingent consideration was $
Note 7. Inventories, net
The components of inventories, net are as follows:
|
|
June 30, 2022 |
|
|
March 31, 2022 |
|
||
|
|
(in thousands) |
|
|||||
Raw materials and supplies |
|
$ |
|
|
$ |
|
||
Work-in-progress |
|
|
|
|
|
|
||
Finished goods |
|
|
|
|
|
|
||
Inventories, net |
|
$ |
|
|
$ |
|
||
The Company’s inventories relate to its Impella® and Abiomed Breethe OXY-1 System™ (“Breethe OXY-1”) product platforms. Finished goods and work-in-process inventories consist of direct material, labor and overhead.
Note 8. Property and Equipment, net
The components of property and equipment, net are as follows:
|
|
June 30, 2022 |
|
|
March 31, 2022 |
|
||
|
|
(in thousands) |
|
|||||
Land |
|
$ |
|
|
$ |
|
||
Building and building improvements |
|
|
|
|
|
|
||
Leasehold improvements |
|
|
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|
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|
||
Machinery, equipment and computer software |
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|
||
Furniture and fixtures |
|
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|
|
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|
||
Construction in progress |
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|
|
|
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|
||
Total cost |
|
|
|
|
|
|
||
Less accumulated depreciation |
|
|
( |
) |
|
|
( |
) |
Property and equipment, net |
|
$ |
|
|
$ |
|
||
Depreciation expense related to property and equipment was $
16
Note 9. Goodwill and Other Intangible Assets, net
Goodwill
The carrying amount of goodwill as of June 30, 2022 and March 31, 2022 was $
|
|
(in thousands) |
|
|
Balance, March 31, 2022 |
|
$ |
|
|
Foreign currency translation |
|
|
( |
) |
Balance, June 30, 2022 |
|
$ |
|
|
The Company evaluates goodwill at least annually on October 31, as well as whenever events or changes in circumstances suggest that the carrying amount may not be recoverable. The Company has
Other Intangible Assets, net
Other intangible assets, net consists of the following:
|
|
June 30, 2022 |
|
|||||||||||
|
|
Weighted Average Amortization Period |
|
Cost |
|
|
Accumulated Amortization |
|
|
Net Carrying Value |
|
|||
|
|
|
|
(in thousands) |
|
|||||||||
Finite-lived intangible assets |
|
|
|
|
|
|
|
|
|
|
|
|||
Developed technology |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||
Indefinite-lived intangible assets |
|
|
|
|
|
|
|
|
|
|
|
|||
In-process research and development |
|
|
|
|
|
|
|
— |
|
|
|
|
||
Total |
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
|
|
March 31, 2022 |
|
|||||||||||
|
|
Weighted Average Amortization Period |
|
Cost |
|
|
Accumulated Amortization |
|
|
Net Carrying Value |
|
|||
|
|
|
|
(in thousands) |
|
|||||||||
Finite-lived intangible assets |
|
|
|
|
|
|
|
|
|
|
|
|||
Developed technology |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||
Indefinite-lived intangible assets |
|
|
|
|
|
|
|
|
|
|
|
|||
In-process research and development |
|
|
|
|
|
|
|
— |
|
|
|
|
||
Total |
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
The Company’s finite-lived intangible asset represents developed technology associated with the estimated fair value of the Breethe OXY-1 System. During the year ended March 31, 2021, the Company reclassified the in-process research and development (“IPR&D”) asset to developed technology upon receiving U.S. Food and Drug Administration or FDA 510(k) clearance of the Breethe OXY-1 System and began amortizing the intangible asset on a straight-line basis over an estimated useful life of
The Company’s IPR&D asset represents the estimated fair value of the Impella ECPTM related to the acquisition of ECP and AIS, in July 2014. The estimated fair value of the IPR&D asset at the acquisition date was determined using a probability-weighted income approach, which discounts expected future cash flows to present value. The projected cash flow estimates for the future Impella ECPTM expandable catheter pump were based on certain key assumptions, including estimates of future revenue and expenses, taking into account the stage of development of the technology at the acquisition date and the time and resources needed to complete development.
The Company evaluates the other intangible assets at least annually on October 31, as well as whenever events or changes in circumstances suggest that the carrying amount may not be recoverable. The Company has
17
Note 10. Other Assets
The components of other assets are as follows:
|
|
June 30, 2022 |
|
|
March 31, 2022 |
|
||
|
|
(in thousands) |
|
|||||
Investment in Shockwave Medical |
|
$ |
|
|
$ |
|
||
Other investments (Note 6) |
|
|
|
|
|
|
||
Operating lease right of use assets |
|
|
|
|
|
|
||
Other intangible assets and other assets |
|
|
|
|
|
|
||
Total other assets |
|
$ |
|
|
$ |
|
||
Investment in Shockwave Medical
The fair value of the Company’s investment in Shockwave Medical, a publicly-traded medical device company, was $
Operating Lease Right of Use Assets
The Company has lease agreements for real estate including corporate offices and warehouse space, vehicles and certain equipment. The balance of operating lease right-of-use assets included in other assets was $
Other Long-Term Assets
The Company’s other long-term assets is comprised primarily of license manufacturing rights to certain technology from third parties and prepayments related to the Company’s clinical trial activities.
Note 11. Accrued Expenses
Accrued expenses consist of the following:
|
|
June 30, 2022 |
|
|
March 31, 2022 |
|
||
|
|
(in thousands) |
|
|||||
Employee compensation |
|
$ |
|
|
$ |
|
||
Sales and income taxes |
|
|
|
|
|
|
||
Research and development |
|
|
|
|
|
|
||
Marketing |
|
|
|
|
|
|
||
Warranty |
|
|
|
|
|
|
||
Professional, legal and accounting fees |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
|
|
$ |
|
|
$ |
|
||
Employee compensation consists primarily of accrued bonuses, accrued commissions and accrued employee benefits. Other includes returns reserve, allowance for rebates and discounts and other miscellaneous accrued expenses.
Note 12. Stockholders’ Equity
Class B Preferred Stock
The Company has authorized
Stock Repurchase Program
In August 2019, the Company’s Board of Directors authorized a stock repurchase program for up to $
18
trading plans and under Rule 10b-18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The stock repurchase program has no time limit and may be suspended for periods or discontinued at any time. The Company is funding the stock repurchase program with its available cash and marketable securities. The remaining authorization under the stock repurchase program was $
The following table provides stock repurchase activities during the quarter:
|
|
For the Three Months Ended June 30, |
|
|||||
|
|
2022 |
|
|
2021 |
|
||
Shares repurchased |
|
|
|
|
|
|
||
Average price per share |
|
$ |
|
|
|
|
||
Value of shares repurchased (in millions) |
|
$ |
|
|
|
|
||
Accumulated Other Comprehensive Loss
The components of accumulated other comprehensive loss are as follows (in thousands):
|
|
Three Months Ended June 30, 2022 |
|
|||||||||||||
|
|
Foreign Currency Translation Losses |
|
|
Unrealized Gains (Losses) on Derivative Instrument |
|
|
Net Unrealized Losses on Marketable Securities, net of tax |
|
|
Total |
|
||||
Balance, March 31, 2022 |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
Other comprehensive loss |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Balance, June 30, 2022 |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
Three Months Ended June 30, 2021 |
|
|||||||||||||
|
|
Foreign Currency Translation (Losses) Gains |
|
|
Unrealized Gains (Losses) on Derivative Instrument |
|
|
Net Unrealized Gains (Losses) on Marketable Securities, net of tax |
|
|
Total |
|
||||
Balance, March 31, 2021 |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
||
Other comprehensive income (loss) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
Balance, June 30, 2021 |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||
Note 13. Stock-Based Compensation
The following table summarizes stock-based compensation expense by financial statement line item in the Company’s condensed consolidated statements of operations for each of the three months ended June 30, 2022 and 2021:
|
|
For the Three Months Ended June 30, |
|
|||||
|
|
2022 |
|
|
2021 |
|
||
|
|
(in thousands) |
|
|||||
Cost of revenue |
|
$ |
|
|
$ |
|
||
Research and development |
|
|
|
|
|
|
||
Selling, general and administrative |
|
|
|
|
|
|
||
|
|
$ |
|
|
$ |
|
||
19
Stock Options
The following table summarizes the stock option activity for the three months ended June 30, 2022:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
Weighted |
|
|
|
|
||||
|
|
|
|
|
Weighted |
|
|
Average |
|
|
Aggregate |
|
||||
|
|
|
|
|
Average |
|
|
Remaining |
|
|
Intrinsic |
|
||||
|
|
Options |
|
|
Exercise |
|
|
Contractual |
|
|
Value |
|
||||
|
|
(in thousands) |
|
|
Price |
|
|
Term (years) |
|
|
(in thousands) |
|
||||
Outstanding at beginning of period |
|
|
|
|
$ |
|
|
|
|
|
|
|
||||
Granted |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Exercised |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Cancelled and expired |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Outstanding at end of period |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Exercisable at end of period |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Options vested and expected to vest at end of period |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Stock options generally vest and become exercisable annually over
The aggregate intrinsic value of stock options exercised was $
The Company estimates the fair value of each stock option granted at the grant date using the Black-Scholes option valuation model.
|
|
For the Three Months Ended June 30, |
|
|||||
|
|
2022 |
|
|
2021 |
|
||
Weighted average grant-date fair value |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Valuation assumptions: |
|
|
|
|
|
|
||
Risk-free interest rate |
|
|
% |
|
|
% |
||
Expected option life (years) |
|
|
|
|
|
|
||
Expected volatility |
|
|
% |
|
|
% |
||
Restricted Stock Units
The following table summarizes activity of restricted stock units for the three months ended June 30, 2022:
|
|
|
|
|
Weighted |
|
||
|
|
|
|
|
Average |
|
||
|
|
Number of |
|
|
Grant Date |
|
||
|
|
Shares |
|
|
Fair Value |
|
||
|
|
(in thousands) |
|
|
(per share) |
|
||
Restricted stock units at beginning of period |
|
|
|
|
$ |
|
||
Granted (1) |
|
|
|
|
|
|
||
Vested |
|
|
( |
) |
|
|
|
|
Forfeited |
|
|
( |
) |
|
|
|
|
Restricted stock units at end of period |
|
|
|
|
$ |
|
||
(1)
The weighted average grant-date fair value for restricted stock units granted during the three months ended June 30, 2022 was $
Restricted stock units generally vest annually, over
20
As of June 30, 2022, the Company recognized compensation expense based on the probable outcomes related to the prescribed performance targets on the outstanding awards. The remaining unrecognized compensation expense for outstanding performance-based and market-based restricted stock units as of June 30, 2022 was $
Performance-Based Awards
The Company grants performance-based restricted stock units to certain executive officers and employees, which vest upon achievement of prescribed service-based milestones by the award recipients and the achievement of prescribed performance milestones by the Company, as defined in the respective agreements.
Market-Based Awards
The Company grants market-based restricted stock units to certain executive officers and employees. These restricted stock units vest upon achievement of prescribed service-based milestones, relative total shareholder return (“TSR”) goals by the Company and the achievement of prescribed performance milestones by the Company, as defined in the respective agreements.
The Company used a Monte-Carlo simulation model to estimate the grant-date fair value of the TSR restricted stock units.
The table below sets forth the assumptions used to value the outstanding market-based restricted stock units and the estimated grant-date fair value:
|
|
May 2021 |
|
|
May 2020 |
|
||
Risk-free interest rate |
|
|
% |
|
|
% |
||
Expected volatility |
|
|
% |
|
|
% |
||
Dividend yield |
|
|
— |
|
|
|
— |
|
Remaining performance period (years) |
|
|
|
|
|
|||
Estimated fair value per share |
|
$ |
|
|
$ |
|
||
Target performance (number of shares) |
|
|
|
|
|
|
||
Note 14. Income Taxes
The Company’s income tax provision was $
The Company is subject to the examination of its income tax returns by the Internal Revenue Service and other tax authorities. The outcome of these audits cannot be predicted with certainty. The Company’s most recent completed income tax audits were in the U.S., relating to fiscal year 2016 and in Germany, which covered fiscal years 2016 through 2019. These tax audits did not materially impact the Company’s financial statements. All other tax years remain subject to examination by the IRS, state and foreign tax authorities.
Note 15. Commitments and Contingencies
From time to time, the Company is involved in legal and administrative proceedings and claims of various types. In some actions, the claimants seek damages, as well as other relief, which, if granted, would require significant expenditures. The Company records a liability in its consolidated financial statements for these matters when a loss is known or considered probable and the amount can be reasonably estimated. The Company reviews these estimates each accounting period as additional information is known and adjusts the loss provision when appropriate. If a matter is both probable to result in liability to the Company and the amount of loss can be reasonably estimated, the Company estimates and discloses the possible loss or range of loss. If the loss is not probable or cannot be reasonably estimated, a liability is not recorded in its consolidated financial statements.
21
Maquet Matters
The Company has been litigating certain patents owned by Maquet Cardiovascular LLC (“Maquet”) in two separate cases pending in the U.S. District Court for the District of Massachusetts (“D. Mass” or “the Court”) since 2016.
In May 2016, the Company filed a declaratory judgment action (the “2016 Action”) alleging that it does not infringe Maquet’s patent. Following the claim construction (“Markman”) order issued in November 2018, and prior to the close of discovery, both parties filed series of motions. On September 30, 2021, the Court granted the Company’s Motion for Summary Judgement (“MSJ”) for non-infringement of the two claims remaining in this case. Maquet moved for reconsideration of the MSJ order, which the Court denied on November 30, 2021. The Court has not entered a final judgement; therefore, the case is not yet appealable to the Federal Circuit.
In November 2017, Maquet filed a new action in D. Mass alleging that the Company’s Impella 2.5®, Impella CP®, and Impella 5.0® heart pumps infringe certain claims of another patent in the same family (the seventh patent overall between both cases). The Parties submitted Markman briefs and argued their respective positions in November 2019. A Markman order has not yet issued, and discovery remains ongoing.
The asserted patents in both cases expired on September 1, 2020.
The Company is unable to estimate the potential liability with respect to the legal matters noted above. There are numerous factors that make it difficult to meaningfully estimate possible loss or range of loss at this stage of the legal proceedings, including the significant number of legal and factual issues still to be resolved in the Maquet patent disputes.
Note 16. Segment and Geographic Information
Segment Information
Operating segments are components of an enterprise for which separate financial information is available and is evaluated regularly by the Company’s chief operating decision-maker (“CODM”) in deciding how to allocate resources and in assessing performance. The Company’s CODM (determined to be the Chief Executive Officer) reviews the business, makes investment and resource allocation decisions, and assesses operating performance based on the Company’s consolidated operating results. The Company operates as
Geographic Information
Sales outside the U.S. accounted for
Geographic information about long-lived assets, net excluding goodwill and other intangible assets is as follows:
|
|
June 30, 2022 |
|
|
March 31, 2022 |
|
||
|
|
(in thousands) |
|
|||||
United States |
|
$ |
|
|
$ |
|
||
Europe |
|
|
|
|
|
|
||
Japan |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
Note 17. Employee Benefit Plans
The Company sponsors voluntary 401(k) retirement savings plans for eligible employees in the U.S. and Japan. The Company matches the contributions of participating employees on the basis of percentages specified in each plan. Total expense related to the Company's matching contributions to the plans was $
22
ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward Looking Statements
This Report, including the documents incorporated by reference in this Report, includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, may be forward-looking statements. These forward-looking statements may be accompanied by such words as “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “potential,” “project,” “target,” “should,” “likely,” “will” and other words and terms of similar meaning.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and the accompanying notes included in this Report. The following discussion may contain forward-looking statements that reflect our plans, estimates and beliefs, which are subject to risks, uncertainties and assumptions. Our actual results could differ materially from those expressed or implied by such statements. The forward-looking statements in this Report are based on certain risks and uncertainties, including, but not limited to, the risk factors described in “Part I, Item 1A. Risk Factors” of our annual report on Form 10-K for the year ended March 31, 2022 and the following: the impact of public health threats and epidemics, including the COVID-19 pandemic; the impact of prolonged economic downturns on our operations and financial conditions; fluctuations in foreign currency exchange rates and inflation; climate change; corporate social responsibility and sustainability matters; our dependence on Impella® products for most of our revenues; our ability to successfully compete against our existing or potential competitors; the acceptance of our products by cardiac surgeons and interventional cardiologists, especially those with significant influence over medical device selection and purchasing decisions; the effect of long sales and training cycles associated with expansion into new hospital cardiac centers; the potential for reduced market acceptance of our products and reduced revenue due to lengthy clinician training process; our ability to effectively manage our growth; our ability to anticipate demand for, and successfully commercialize, our products; the impact of unsuccessful clinical trials or procedures relating to products under development; our ability to develop new circulatory assist products and our development efforts; our ability to develop additional and high-quality manufacturing capacity to support continued demand for our products; our dependence on third-party payers to provide reimbursement to our customers of our products; our suppliers’ failure to provide the components we require; our reliance on distributors to sell our products in international markets; our success in expanding our direct sales activities into international markets; our ability to sustain profitability at levels achieved in recent years; the unpredictability of fluctuations in our operating results; our ability to develop and commercialize new products or acquire desirable companies, products or technologies; inventory write-downs and other costs due to product quality issues; risks and liabilities associated with acquisitions of other companies or businesses, including our ability to integrate acquired businesses into our operations; the impact of consolidation in the healthcare industry on our prices; our ability to attract and retain key personnel; our ability to obtain and maintain governmental and other regulatory approvals and market and sell our products in certain jurisdictions; regulatory or enforcement actions and product liability suits relating to off-label uses of our products; the increased risk of material product liability claims and impact on our reputation and financial results; our ability to maintain compliance with regulatory requirements and continuing regulatory review; the impact of mandatory or voluntary product recalls; changes in healthcare policy and reimbursement systems in the U.S. and abroad; our ability to comply with healthcare “fraud and abuse” laws and any related penalties for non-compliance; our failure to comply with the U.S. Foreign Corrupt Practices Act and other anti-corruption laws, export control laws, import and customs laws, trade and economic sanctions laws and other laws governing our operations; our or our vendors’ ability to achieve and maintain high manufacturing standards; the economic effects of “Brexit” and related impacts to relationships with our existing and future customers; our potential “ownership change” for U.S. federal income tax purposes and our limited utilization of net operating losses and income tax credit carryforwards from prior tax years; our ability to maintain compliance with, and the impact on us of changes in, tax laws; our ability to comply with, and the impact of any related costs or regulatory actions with respect to, environmental, health and safety requirements; our failure to protect our intellectual property, both domestically and internationally, or develop or acquire additional intellectual property; claims that our current or future products infringe or misappropriate the proprietary rights of others; compliance with laws protecting the confidentiality of patient health information; disruptions of critical information systems or material breaches in the security of our systems; risks relating to our shares of common stock, including market price volatility and the potential for dilution to our stockholders’ ownership interests through the sale of additional securities.
23
Overview
We are a provider of medical devices that provide circulatory support and oxygenation. We develop, manufacture and market proprietary products that are designed to enable the heart to rest and recover by improving blood flow and/or performing the pumping function of the heart and provide sufficient oxygenation to those in respiratory failure. Our products are used in the cardiac catheterization lab, or cath lab, by interventional cardiologists and in the heart surgery suite by cardiac surgeons for patients who are in need of hemodynamic support prophylactically or emergently before, during or after angioplasty or heart surgery procedures. We believe that heart recovery is the optimal clinical outcome for a patient experiencing heart failure because it enhances the potential for the patient to go home with their own heart, facilitating the restoration of quality of life. In addition, we believe that, for the care of such patients, heart recovery is often the most cost-effective solution for the healthcare system.
COVID-19 Pandemic
We are subject to additional risks and uncertainties as a result of the ongoing novel coronavirus (“COVID-19”) pandemic. Since March 2020, the ongoing COVID-19 pandemic has adversely impacted and is likely to further adversely impact our business and markets, including our workforce and the operations of our customers, suppliers, and business partners. While the COVID-19 (including new variants of COVID-19) pandemic remains fluid and continues to evolve differently across various geographies, we believe we are likely to continue to experience variable impacts on our business. To ensure the health and safety of our global employees, we continue to offer onsite COVID-19 testing and vaccinations in order to maintain a safe working environment. Our proactive testing and vaccination programs have reduced exposure with early detection and enabled our manufacturing facilities to operate at full capacity.
The depth and extent to which the COVID-19 pandemic may directly or indirectly impact our business, results of operations, financial condition and individual markets is dependent upon various factors, including the spread of additional variants; the availability of vaccinations, personal protective equipment, intensive care unit (“ICU”) and operating room capacity, and medical staff; and government interventions to reduce the spread of the virus. When COVID-19 infection rates spike in a particular region, our patient utilization volumes have generally been negatively impacted as hospitals face capacity limitations, staffing shortages and some in-patient treatments have been deferred.
While patient utilization increased in the first quarter of fiscal year 2023, sales were impacted by slower than expected improvements in hospital staffing shortages. We continue to closely monitor the impact of COVID-19 on all aspects of our business and geographies, including any impact on our customers, including the ongoing hospital labor shortages, employees, suppliers, vendors, business partners and distribution channels, as well as on procedures and the demand for our products by keeping apprised of local, regional, and global COVID-19 surges (including new variants of the virus).
While we cannot reliably estimate the extent to which the COVID-19 pandemic may impact patient utilization and revenues of our products, our focus is to continue increasing patient utilization of our Impella devices in the U.S. and growing our business internationally, with a continued focus on Europe and Japan. As of the date of issuance of these financial statements, the extent to which the COVID-19 pandemic may materially adversely affect our financial condition, liquidity or results of operations is uncertain.
Macroeconomic Conditions
Our revenues and results of operations may be susceptible to fluctuations in macroeconomic conditions, including inflation and slowing economic growth and contractions, fluctuations in the rate of exchange between the U.S. dollar and foreign currencies, changes in customer and consumer sentiment and demand, increasing prices for raw materials, transportation and labor costs, disruptions in the manufacturing, supply and distribution operations of us and our suppliers. The nature and extent of the impact of these factors among others varies by region and remains uncertain and unpredictable.
Acquisition of preCARDIA
We acquired 100% interest in preCARDIA on May 28, 2021. preCARDIA is a developer of a proprietary catheter and controller that will complement Abiomed’s product portfolio to expand options for patients with acute decompensated heart failure (“ADHF”). The preCARDIA system is uniquely designed to rapidly treat ADHF-related volume overload by effectively reducing cardiac filling pressures and promoting decongestion to improve overall cardiac and renal function. We acquired preCARDIA for a purchase price of $115.2 million. The acquisition was accounted for as an asset acquisition as substantially all of the fair value of the acquisition related to the acquired in-process research and development asset. Since the acquired technology platform is pre-commercial and has not reached technical feasibility, the cost of the in-process research and development asset was expensed, resulting in a charge of $115.5 million to the condensed consolidated statements of operations for the three months ended June 30, 2021. In addition, we recognized a gain of $21.0 million related to our previously owned minority interest within the condensed consolidated statements of operations for the three months ended June 30, 2021. In connection with the acquisition, we acquired a license agreement, under which there is a potential payout of $5 million based on the achievement of a commercial milestone.
24
Our Existing Products
Our strategic focus and the primary driver of our revenue growth is the market penetration of our family of Impella® heart pumps. The Impella device portfolio, which includes the Impella 2.5®, Impella CP®, Impella 5.0®, Impella LD®, Impella 5.5® and Impella RP® devices, has supported thousands of patients worldwide.
As we continue to innovate our product portfolio, we expect to continue to transition our sales focus to newer generations of Impella devices over time. In the catheterization lab, we expect to continue shifting sales focus from the Impella 2.5 device to the Impella CP device and in the surgical suite, from the Impella 5.0 device to the Impella 5.5 device. Accordingly, we expect that a greater concentration of our product revenues will be from Impella CP and Impella 5.5 devices in the future.
Below is a summary of our existing products and the countries where they have received regulatory approval. We expect to continue to make additional regulatory submissions for our products for additional indications and in additional countries.
Impella 2.5®
The Impella 2.5 device is a percutaneous heart pump with an integrated motor and sensors. The technology is designed primarily for use by interventional cardiologists to support patients in the cath lab who may require assistance to maintain circulation. The Impella 2.5 heart pump can be quickly inserted via the femoral artery to reach the left ventricle of the heart, where it is directly deployed to draw blood out of the ventricle and deliver it to the circulatory system. This function is intended to reduce ventricular work and provide blood flow to vital organs. The Impella 2.5 heart pump is introduced with normal interventional cardiology procedures and can pump up to 2.5 liters of blood per minute.
Our Impella 2.5 device has received FDA and PMDA approvals which allows us to market it in the U.S. and Japan, respectively. The technology is also approved for use in multiple other countries.
Impella CP®
The Impella CP device provides blood flow of up to 4.3 liters of blood per minute and is primarily used by either interventional cardiologists to support patients in the cath lab or by cardiac surgeons in the heart surgery suite.
Our Impella CP device has received FDA, CE Mark, PMDA approvals which allows us to market it in the U.S., European Union and Japan, respectively. The technology is also approved for use in multiple other countries.
Impella 5.0® and Impella LD®
The Impella 5.0 and Impella LD devices are percutaneous heart pumps with integrated motors and sensors for use primarily in the heart surgery suite. These devices are designed to support patients who require higher levels of circulatory support as compared to the Impella 2.5 and Impella CP devices.
Our Impella 5.0 and Impella LD devices have received FDA, CE Mark, PMDA approvals which allow us to market them in the U.S., European Union and Japan, respectively. The technology is also approved for use in multiple other countries.
Impella 5.5®
The Impella 5.5 device is designed to be a percutaneous heart pump with integrated motors and sensors. The Impella 5.5 device delivers peak flows of greater than six liters per minute. The Impella 5.5 device has a motor housing that is thinner and 45% shorter than the Impella 5.0 device and it improves ease of pump insertion through the vasculature.
In September 2019, the Impella 5.5 device received PMA approval from the FDA for safety and efficacy in the therapy of cardiogenic shock for up to 14 days in the U.S. The Impella 5.5 device was introduced in the U.S. through a controlled rollout at hospitals with established heart recovery protocols beginning in fiscal year 2020. In April 2018, the Impella 5.5 device received CE Mark approval in Europe and was introduced in Europe through a controlled rollout, similar to the U.S. In November 2021, the Impella 5.5 device received PMDA approval and we began a controlled rollout in Japan in fiscal year 2022, similar to the U.S. and Europe.
Impella RP®
The Impella RP device is a percutaneous catheter-based axial flow pump that is designed to allow for greater than four liters of blood flow per minute and is intended to provide the flow and pressure needed to compensate for right side heart failure. Our Impella RP device has received FDA and CE Mark approval which allows us to market this technology in the U.S. and European Union. The Impella RP device is the first percutaneous heart pump designed for right heart support to receive FDA approval. The Impella RP device is approved to provide support of the right heart during times of acute failure for certain patients who have received a left ventricle assist device or have suffered heart failure due to AMI, a failed heart transplant, or following open heart surgery. Additionally, we have adapted the design of the Impella RP device to be implanted through the internal jugular vein in the neck; we believe this approach is the preferred method for heart surgeons as it allows for patient ambulation. We anticipate making a regulatory submission for this technology in fiscal year 2023.
25
Impella SmartAssist®
The Impella SmartAssist platform includes optical sensor technology for improved pump positioning and the use of algorithms that enable improved native heart assessment during the weaning process. The Impella SmartAssist platform is currently available for our Impella CP, Impella 5.5 and Impella RP heart pumps. The Impella SmartAssist platform received FDA, CE Mark and PMDA approvals which allows us to market it in the U.S., European Union and Japan, respectively. The technology is also approved for use in multiple other countries.
Impella Connect®
Impella Connect is a cloud-based technology that enables secure, remote viewing of the Automated Impella Controller, or AIC, for physicians and hospital staff. We began a controlled rollout of Impella Connect at certain hospital sites during fiscal year 2020 and have transitioned most of our customers to this technology. We continue to introduce this technology to hospitals outside the U.S.
Abiomed Breethe OXY-1 System™
The Breethe OXY-1 System is a portable external respiratory assistance device that we acquired as part of our acquisition of Breethe, in April 2020 in connections with our efforts to expand our product portfolio to support the needs of patients, such as those suffering from cardiogenic shock or respiratory failure, whose lungs can no longer provide sufficient oxygenation. The Breethe OXY-1 System takes venous blood from the patient, removes carbon dioxide and adds oxygen much like a human lung, and returns the oxygenated blood safely back to the patient. In October 2020, the Breethe OXY-1 System received 510(k) clearance from the FDA for an all-in-one, compact cardiopulmonary bypass system. We have conducted a controlled launch of the Breethe OXY-1 System at a limited number of hospitals in the U.S. and have seen positive results regarding survival, blood compatibility, durability of the Pump Lung Unit (“PLU”), hemodynamic flow rates and ease of patient ambulation. Based on our early patient study, we identified areas of improvement around the electronics of the console and implemented a voluntary recall at the seven hospitals where the Breethe OXY-1 Systems were placed in fiscal year 2022. Until the corrective action is completed, we are not expanding the number of patients or centers under the controlled launch. The console upgrades require 510(k) clearance from the FDA. We expect to resume commercialization of the Breethe OXY-1 System under a controlled rollout in the second half of fiscal year 2023.
Our Product Pipeline
Impella ECP™
The Impella ECP device is designed for blood flow of greater than three and a half liters per minute. It is intended to be delivered on a standard sized (9 French) catheter and will include an expandable inflow in the left ventricle. The Impella ECP device has achieved initial FDA safety milestones, including completion of the first stage in its FDA early feasibility study (“EFS”). The prospective, multi-center, single arm EFS is designed to allow us, study investigators, and the FDA to make qualitative assessments about the safety and feasibility of the use of the Impella ECP device in high-risk percutaneous coronary intervention (“PCI”) patients. In fiscal year 2021, we received approval from the FDA to expand the EFS for the Impella ECP device and we continue to enroll patients in this study. In August 2021, we received Breakthrough Device designation by the FDA for the Impella ECP device, which is provided pursuant to the FDA’s Breakthrough Device Program, a program intended to help patients receive more timely access to certain medical technologies by providing a speedier development, assessment and review process for such technologies. The protocol of a single arm pivotal high-risk PCI study for the Impella ECP device, as part of an investigational device exemption (“IDE”), has been approved by the FDA. We have supported over 25 patients in our early feasibility study and began patient enrollment under a pivotal-like protocol in March 2022. We expect to transition to a pivotal trial in fiscal year 2023. The Impella ECP device is still in development and has not been approved for commercial use or sale.
Impella BTR™
The Impella BTR device is designed to be a percutaneous, weanable, smart heart pump with integrated motors and sensors. The Impella BTR device is designed to allow for greater than six liters of blood flow per minute, provide up to one year of hemodynamic support and include a wearable driver designed for hospital discharge. The Impella BTR device is expected to and intended to allow for heart recovery with adjunctive therapies for advanced heart-failure patients. In December 2021, we received conditional approval for an IDE early feasibility study for the Impella BTR device and began enrollment in early fiscal year 2023. The Impella BTR device is still in development and has not been approved for commercial use or sale.
preCARDIA™
The preCARDIA system is a minimally invasive, catheter-mounted superior vena cava therapy system designed to rapidly treat acutely decompensated heart failure (“ADHF”) related volume overload by effectively reducing cardiac filling pressures and promoting decongestion to improve overall cardiac and renal function. The preCARDIA system allows for straightforward placement in the ICU by physicians and hemodynamic monitoring by medical staff. Prior to the acquisition of preCARDIA, the preCARDIA system received Breakthrough Device Designation by the FDA. In January 2022, we announced results of the first-in-human early feasibility study of the preCARDIA system. The multicenter, prospective, single-arm VENUS-HF early feasibility study examined 30 patients with ADHF
26
who were assigned preCARDIA therapy for 12 or 24 hours. The primary endpoint was a composite of major adverse events through 30 days. The results support additional study of the preCARDIA system. In the third quarter of fiscal year 2022, the FDA authorized the preCARDIA early feasibility study to be expanded by 30 additional patients. The preCARDIA system is still in development and has not been approved for commercial use or sale.
Critical Accounting Policies and Estimates
Other than the accounting policy changes discussed in “Note 2. Basis of Presentation and Summary of Significant Accounting Policies” to our condensed consolidated financial statements, which is incorporated herein by reference, there have been no significant changes in our critical accounting policies during the three months ended June 30, 2022, as compared to the critical accounting policies disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2022.
Results of Operations for the Three Months Ended June 30, 2022 compared with the Three Months Ended June 30, 2021
Revenue
The following table disaggregates our revenue by products and services:
|
For the Three Months Ended June 30, |
|
||||||||||||||||||||||||
|
2022 |
|
|
2021 |
|
|
Change |
|
||||||||||||||||||
|
Amount |
|
|
% of Total revenue |
|
|
Amount |
|
|
% of Total revenue |
|
|
Amount |
|
|
% |
|
|||||||||
Product revenue |
$ |
|
264,472 |
|
|
|
95 |
% |
|
$ |
|
241,474 |
|
|
|
96 |
% |
|
$ |
|
22,998 |
|
|
|
10 |
% |
Service and other revenue |
|
|
12,677 |
|
|
|
5 |
% |
|
|
|
11,111 |
|
|
|
4 |
% |
|
|
|
1,566 |
|
|
|
14 |
% |
Total revenue |
$ |
|
277,149 |
|
|
|
100 |
% |
|
$ |
|
252,585 |
|
|
|
100 |
% |
|
$ |
|
24,564 |
|
|
|
10 |
% |
The following table disaggregates our revenue by geographic location:
|
For the Three Months Ended June 30, |
|
||||||||||||||||||||||||
|
2022 |
|
|
2021 |
|
|
Change |
|
||||||||||||||||||
|
Amount |
|
|
% of Total revenue |
|
|
Amount |
|
|
% of Total revenue |
|
|
Amount |
|
|
% |
|
|||||||||
United States |
$ |
|
226,520 |
|
|
|
82 |
% |
|
$ |
|
207,143 |
|
|
|
82 |
% |
|
$ |
|
19,377 |
|
|
|
9 |
% |
Europe |
|
|
33,836 |
|
|
|
12 |
% |
|
|
|
32,237 |
|
|
|
13 |
% |
|
|
|
1,599 |
|
|
|
5 |
% |
Japan |
|
|
13,235 |
|
|
|
5 |
% |
|
|
|
11,284 |
|
|
|
4 |
% |
|
|
|
1,951 |
|
|
|
17 |
% |
Rest of world |
|
|
3,558 |
|
|
|
1 |
% |
|
|
|
1,921 |
|
|
|
1 |
% |
|
|
|
1,637 |
|
|
|
85 |
% |
Outside the U.S. |
|
|
50,629 |
|
|
|
18 |
% |
|
|
|
45,442 |
|
|
|
18 |
% |
|
|
|
5,187 |
|
|
|
11 |
% |
Total revenue |
$ |
|
277,149 |
|
|
|
100 |
% |
|
$ |
|
252,585 |
|
|
|
100 |
% |
|
$ |
|
24,564 |
|
|
|
10 |
% |
The following table disaggregates our product revenue by geographic location:
|
For the Three Months Ended June 30, |
|
||||||||||||||||||||||||
|
2022 |
|
|
2021 |
|
|
Change |
|
||||||||||||||||||
|
Amount |
|
|
% of Total revenue |
|
|
Amount |
|
|
% of Total revenue |
|
|
Amount |
|
|
% |
|
|||||||||
United States |
$ |
|
215,567 |
|
|
|
78 |
% |
|
$ |
|
197,459 |
|
|
|
78 |
% |
|
$ |
|
18,108 |
|
|
|
9 |
% |
Europe |
|
|
32,569 |
|
|
|
12 |
% |
|
|
|
31,229 |
|
|
|
12 |
% |
|
|
|
1,340 |
|
|
|
4 |
% |
Japan |
|
|
12,778 |
|
|
|
5 |
% |
|
|
|
10,865 |
|
|
|
4 |
% |
|
|
|
1,913 |
|
|
|
18 |
% |
Rest of world |
|
|
3,558 |
|
|
|
1 |
% |
|
|
|
1,921 |
|
|
|
1 |
% |
|
|
|
1,637 |
|
|
|
85 |
% |
Outside the U.S. |
|
|
48,905 |
|
|
|
18 |
% |
|
|
|
44,015 |
|
|
|
17 |
% |
|
|
|
4,890 |
|
|
|
11 |
% |
Total product revenue |
$ |
|
264,472 |
|
|
|
95 |
% |
|
$ |
|
241,474 |
|
|
|
96 |
% |
|
$ |
|
22,998 |
|
|
|
10 |
% |
Product revenue encompasses Impella 2.5, Impella CP, Impella 5.0, Impella LD, Impella 5.5, Impella RP and Impella AIC product sales and related accessories. Service and other revenue represents revenue earned on service maintenance contracts and preventative maintenance calls. The following is a discussion of our revenues for the three months ended June 30, 2022.
27
Total Revenue
Total revenue increased by $24.6 million, or 10%, from the three months ended June 30, 2021 to the three months ended June 30, 2022. The increase in total revenue from the three months ended June 30, 2021 to the three months ended June 30, 2022 was driven by an increase in both product revenue and service and other revenue, as further described below, despite the unfavorable impact of foreign exchange fluctuations due to the strengthening of the U.S. dollar.
Product Revenue
Product revenue increased by $23.0 million, or 10%, from the three months ended June 30, 2021 to the three months ended June 30, 2022. U.S. product revenue increased by $18.1 million, or 9%, from the three months ended June 30, 2021 to the three months ended June 30, 2022. Outside the U.S., product revenue increased by $1.6 million, or 85%, from the three months ended June 30, 2021 to the three months ended June 30, 2022.
Product revenue increased in the three months ended June 30, 2022, primarily due to sales mix and higher patient utilization in the U.S., Germany and Japan as compared to the three months ended June 30, 2021 as we experienced varying levels of recovery across our product lines and geographic locations from the challenges caused by the COVID-19 pandemic, partially offset by the unfavorable impact of foreign exchange fluctuations due to the strengthening of the U.S. dollar.
Service and other revenue
Service and other revenue increased by $1.6 million, or 14%, from the three months ended June 30, 2021 to the three months ended June 30, 2022. The increase in service revenue was primarily due to an increase in service contracts sold. We have expanded the number of Impella AIC consoles at many of our existing higher volume customer sites and continue to sell additional consoles to new customer sites. We expect revenue growth for service revenue to be consistent with recent history as most customer sites in the U.S. have service contracts which typically have three-year terms.
Cost of Revenue
|
For the Three Months Ended June 30, |
|
||||||||||||||||||||||||
|
2022 |
|
|
2021 |
|
|
Change |
|
||||||||||||||||||
|
Amount |
|
|
% of Total revenue |
|
|
Amount |
|
|
% of Total revenue |
|
|
Amount |
|
|
% |
|
|||||||||
Cost of revenue |
$ |
|
52,626 |
|
|
|
19 |
% |
|
$ |
|
45,188 |
|
|
|
18 |
% |
|
$ |
|
7,438 |
|
|
|
16 |
% |
Cost of revenue increased by $7.4 million, or 16%, from the three months ended June 30, 2021 to the three months ended June 30, 2022. Gross margin was 81.0% for the three months ended June 30, 2022 and 82.1% for the three months ended June 30, 2021.
Cost of product revenue increased due to our investment in direct labor and overhead as we continue to expand the manufacturing capacity of our facilities in the U.S. and Germany, resulting in a corresponding decrease to gross margin.
Operating Expenses
|
For the Three Months Ended June 30, |
|
||||||||||||||||||||||||
|
2022 |
|
|
2021 |
|
|
Change |
|
||||||||||||||||||
|
Amount |
|
|
% of Total revenue |
|
|
Amount |
|
|
% of Total revenue |
|
|
Amount |
|
|
% |
|
|||||||||
Research and development |
$ |
|
40,477 |
|
|
|
15 |
% |
|
$ |
|
37,708 |
|
|
|
15 |
% |
|
$ |
|
2,769 |
|
|
|
7 |
% |
Selling, general and administrative |
|
|
117,996 |
|
|
|
43 |
% |
|
|
|
103,484 |
|
|
|
41 |
% |
|
|
|
14,512 |
|
|
|
14 |
% |
Acquired in-process research and development |
|
|
- |
|
|
|
0 |
% |
|
|
|
115,490 |
|
|
|
46 |
% |
|
|
|
(115,490 |
) |
|
|
(100 |
)% |
Total operating expenses |
$ |
|
158,473 |
|
|
|
57 |
% |
|
$ |
|
256,682 |
|
|
|
102 |
% |
|
$ |
|
(98,209 |
) |
|
|
(38 |
)% |
Research and Development Expenses
Research and development expenses increased by $2.8 million, or 7%, from the three months ended June 30, 2021 to the three months ended June 30, 2022. The increase in research and development expenses was primarily due to increases in regulatory and quality hiring, ongoing product development initiatives relating to our existing and pipeline products, including the development of the Impella ECP™, preCARDIA, Impella BTR™ and Breethe OXY-1 System™ devices, the expansion of our engineering organization, continued investment in our clinical trials, most notably the STEMI DTU and PROTECT IV studies, and our focus on clinical,
28
technological and quality initiatives for our products. The increase in research and development expenses was partially offset by a $3.4 million gain related to the change in fair value of our contingent consideration for the three months ended June 30, 2022.
We expect research and development expenses to continue to increase as we continue to increase engineering, product development and clinical spending related to our initiatives to improve our existing products, develop new technologies and conduct clinical studies.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased by $14.5 million, or 14%, from the three months ended June 30, 2021 to the three months ended June 30, 2022. The increase in selling, general and administrative expenses was primarily due to increases in commercial hiring, marketing, travel and clinical training and education initiatives.
We aim to continue to invest strategically in hiring and sales and marketing activities, with a particular focus on training and education to drive utilization of our Impella devices and recovery awareness for acute heart failure patients.
Acquired In-Process Research and Development Expenses
We acquired 100% interest in preCARDIA on May 28, 2021, for a purchase price of $115.2 million. In connection with the acquisition, we acquired net assets of $115.2 million, which included $115.5 million related to the fair value of the in-process research and development asset and $0.3 million for net liabilities assumed. The acquisition was accounted for as an asset acquisition as substantially all of the fair value of the acquisition related to the acquired in-process research and development asset. Since the acquired technology platform is pre-commercial and has not reached technical feasibility, the cost of the in-process research and development asset was expensed, resulting in a charge of $115.5 million to the condensed consolidated statements of operations for the three months ended June 30, 2021.
Interest and other income, net
|
Three Months Ended June 30, |
|||||||||||||||||
|
2022 |
|
|
2021 |
|
|
Change |
|||||||||||
|
Amount |
|
|
Amount |
|
|
Amount |
|
|
% |
||||||||
Interest and other income, net |
$ |
|
3,772 |
|
|
$ |
|
39,935 |
|
|
|
(36,163 |
) |
|
|
(91 |
) |
% |
Interest and other income, net decreased by $36.2 million, or 91%, from the three months ended June 30, 2021 to the three months ended June 30, 2022. This decrease was primarily due to the recognition of a $4.8 million loss from our investment in Shockwave Medical for the three months ended June 30, 2022 compared to a $17.6 million gain for the three months ended June 30, 2021 and the recognition of a $21.0 million gain related to the Company's previously owned minority interest in preCARDIA for the three months ended June 30, 2021. These amounts were partially offset by a $4.7 million gain related to changes in fair value of our investments in medical technology companies, a $2.1 million gain related to foreign currency fluctuations and a $0.5 million increase in interest income related to marketable securities for the three months ended June 30, 2022.
Income tax provision
|
Three Months Ended June 30, |
|||||||||||||||||
|
2022 |
|
|
2021 |
|
|
Change |
|||||||||||
|
Amount |
|
|
Amount |
|
|
Amount |
|
|
% |
||||||||
Income tax provision |
$ |
|
15,268 |
|
|
$ |
|
17,175 |
|
|
|
(1,907 |
) |
|
|
(11 |
) |
% |
The income tax provision decreased by $1.9 million, or 11%, from the three months ended June 30, 2021 to the three months ended June 30, 2022. Our effective income tax rate was 21.9% and 183.7% for the three months ended June 30, 2022 and 2021, respectively. The decrease in the effective income tax rate for the three months ended June 30, 2022 is primarily due to a non-deductible charge for in-process research and development related to the preCARDIA acquisition that occurred during the three months ended June 30, 2021.
Liquidity and Capital Resources
As of June 30, 2022, our total cash, cash equivalents and short and long-term marketable securities totaled $1.0 billion, an increase of $25.5 million compared to $978.7 million at March 31, 2022. The change in our total cash, cash equivalents and short and long-term marketable securities was primarily due to positive cash flows from operations, cash provided by investing activities, net of cash used for purchases of property, equipment and other investments, and net cash used for financing activities related to equity activity.
29
A summary of our cash flow activities is as follows:
|
|
For the Three Months Ended June 30, |
|
|||||
|
|
2022 |
|
|
2021 |
|
||
Net cash provided by operating activities |
|
$ |
68,103 |
|
|
$ |
55,359 |
|
Net cash provided by (used for) investing activities |
|
|
8,114 |
|
|
|
(109,055 |
) |
Net cash used for financing activities |
|
|
(23,936 |
) |
|
|
(7,470 |
) |
Effect of exchange rate changes on cash and cash equivalents |
|
|
(4,607 |
) |
|
|
3,910 |
|
Net increase (decrease) in cash and cash equivalents |
|
$ |
47,674 |
|
|
$ |
(57,256 |
) |
Cash Provided by Operating Activities
For the three months ended June 30, 2022, net cash provided by operating activities consisted of net income of $54.6 million, plus non-cash items of $14.2 million less cash used for working capital of $0.7 million. As discussed above, the change in net income was primarily due to an increase in operating expenses partially offset by an increase in revenue for the three months ended June 30, 2022 compared to the three months ended June 30, 2021. Adjustments for non-cash items consisted primarily of $13.4 million of stock-based compensation expense, $6.6 million of depreciation and amortization expense, $6.4 million in deferred tax provision, $2.6 million in inventory and other write-downs, $0.6 million in accretion on marketable securities and a $0.3 million net change in fair value of our investments in Shockwave Medical and other private medical technology companies. The decrease in cash from changes in working capital is primarily due to a $6.5 million increase in inventory to support growing sales volume, a $2.4 million decrease in deferred revenue and a $1.9 million increase in accounts receivable due to timing of collections partially offset by a $7.0 million increase in accounts payable, accrued expenses and other liabilities and a $3.1 million decrease in prepaid expenses and other assets.
For the three months ended June 30, 2021, cash provided by operating activities consisted of net loss of $26.5 million, plus non-cash items of $108.7 million offset by cash used in working capital of $26.8 million. Adjustments for non-cash items consisted primarily of $115.5 million for acquired preCARDIA in-process research and development, a $21.0 million gain related to our previously owned minority interest in preCARDIA recognized upon the acquisition of preCARDIA in May 2021, a $17.6 million net change in fair value of our investments in Shockwave Medical and other private medical technology companies, $12.6 million of stock-based compensation expense, $6.9 million of depreciation and amortization expense, $6.3 million in deferred tax provision, $3.5 million in inventory and other write-downs, and $0.9 million in accretion on marketable securities. The decrease in cash from changes in working capital included a $20.8 million decrease in accounts payable, accrued expenses and other liabilities and a $8.8 million decrease in accounts receivable due to timing of collections offset by a $8.7 million increase in prepaid expenses and other assets and a $5.8 million increase in inventory due to the mix of customer demand and production.
Cash Provided by (Used for) Investing Activities
For the three months ended June 30, 2022, net cash provided by investing activities included $19.5 million in sales and maturities (net of purchases) of marketable securities, offset by $6.8 million used for the purchase of property and equipment primarily related to continued expansion of manufacturing capacity, office space and research development facilities in Danvers and Aachen, Germany and $4.6 million for our investment in private medical technology companies.
For the three months ended June 30, 2021, net cash used for investing activities included $15.2 million in purchases (net of maturities) from the sale of marketable securities and $7.2 million for the purchase of property and equipment primarily related to continued expansion of manufacturing capacity, office space and research development facilities in Danvers and Aachen, Germany. We also made a $3.9 million investment in private medical technology companies during the first quarter of fiscal 2022.
Capital expenditures for fiscal year 2023 are estimated to range from $40 million to $50 million, including, as part of the long-term development of our business, additional capital expenditures for manufacturing capacity and building expansions in our Danvers and Aachen facilities and information systems development projects.
Cash Used for Financing Activities
For the three months ended June 30, 2022, net cash used for financing activities included $14.5 million for repurchases of our common stock and $11.0 million in payments in lieu of issuance of common stock for payroll withholding taxes upon vesting of certain equity awards. These amounts were offset by $1.5 million in proceeds from the exercise of stock options.
For the three months ended June 30, 2021, net cash used for financing activities included $9.6 million in payments in lieu of issuance of common stock for payroll withholding taxes upon vesting of certain equity awards offset by $2.1 million in proceeds from the exercise of stock options.
30
Operating Capital and Liquidity Requirements
Our sources of cash liquidity are primarily from existing cash and cash equivalents, marketable securities and cash flows from operations. As of June 30, 2022, our cash, cash equivalents, and short and long-term marketable securities totaled $1.0 billion, an increase of $25.5 million compared to $978.7 million as of March 31, 2022. Marketable securities as of June 30, 2022 consisted of $823.7 million held in funds that invest in U.S. Treasury securities, government-backed securities, corporate debt securities and commercial paper. We generated operating cash flows of $68.1 million and $55.4 million for the three months ended June 30, 2022 and 2021, respectively. At June 30, 2022, we had no debt outstanding. We believe that our sources of liquidity are sufficient to fund the current requirements of working capital, capital expenditures, and other financial commitments for at least the next twelve months.
We primarily fund our operations from product sales. Our primary liquidity requirements are to fund the following: expansion of our commercial and operational infrastructures; expansion of our manufacturing capacity and office space; the procurement and production of inventory to meet customer demand for our Impella devices; funding of new product and business development initiatives, such as the recent acquisitions of preCARDIA and Breethe; ongoing commercial launch in Japan and expansion into potential new markets; increased clinical spending; legal expenses related to ongoing patent litigation and other legal matters; purchases of our common stock through our share repurchase programs; payments in lieu of issuance of common stock for payroll withholding taxes upon vesting of certain equity awards and provide for general working capital needs.
We believe that our sources of liquidity are sufficient to fund the current requirements of working capital, capital expenditures, and other financial commitments for at least the next twelve months. Our liquidity is influenced by our ability to sell our products in a competitive industry and our customers’ ability to pay for our products. Factors that may affect liquidity primarily include our ability to penetrate the market for our products, our ability to maintain or reduce the length of the selling cycle for our products, our capital expenditures, and our ability to collect cash from customers after our products are sold. We continue to review our short-term and long-term cash needs on a regular basis.
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
There have been no material changes to our quantitative and qualitative disclosures about market risk as compared to the quantitative and qualitative disclosures about market risk described in our Annual Report on Form 10-K for the fiscal year ended March 31, 2022.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act, as of June 30, 2022. Based on this evaluation, our principal executive officer and principal financial officer concluded that, as of June 30, 2022, these disclosure controls and procedures were effective to provide reasonable assurance that material information required to be disclosed by us, including our consolidated subsidiaries, in reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in SEC rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
During the first quarter of our fiscal year ending March 31, 2023, there were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and Rule 15d-15(f) under the Exchange Act), that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
31
PART II — OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are from time to time involved in various legal actions, the outcomes of which are not within our complete control and may not be known for prolonged periods of time. In some actions, the claimants seek damages, as well as other relief, which, if granted, would require significant expenditures and could impair our business and results of operations. Material legal proceedings are discussed in “Note 15. Commitments and Contingencies” to our condensed consolidated financial statements and such information is incorporated herein by reference.
ITEM 1A. RISK FACTORS
Investing in our common stock involves a high degree of risk. In addition to the other information set forth in this Report, you should carefully consider the factors discussed in "Part I, Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended March 31, 2022, which could materially affect our business, financial condition or future results. As of the date of this Report there has been no material change in any of the risk factors described in our Annual Report on Form 10-K for the fiscal year ended March 31, 2022.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Period |
|
Total Number of Shares Repurchased (1) |
|
|
Average Price Paid per Share (1) |
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) |
|
|
Approximate Dollar Value Maximum of Shares that May Yet Be Purchased Under the Plans or Programs (in $000's) (2) |
|
||||
April 1-30, 2022 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
$ |
103,811 |
|
May 1-31, 2022 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
103,811 |
|
June 1-30, 2022 |
|
|
60,282 |
|
|
|
240.79 |
|
|
|
60,282 |
|
|
|
89,295 |
|
Total |
|
|
60,282 |
|
|
$ |
240.79 |
|
|
|
60,282 |
|
|
$ |
89,295 |
|
(1) The Company’s policy is to consider shares to have been repurchased upon the settlement date of the transaction, which is typically three days subsequent to the trading date.
(2) In August 2019, the Company’s Board of Directors authorized a stock repurchase program for up to $200.0 million of shares of its common stock. The remaining authorization under this program was $89.3 million as of June 30, 2022. The amount reflected under the column captioned “Approximate Dollar Value Maximum of Shares that May Yet Be Purchased Under the Plans or Programs (in $000's)” reflects the approximate dollar value maximum at the end of the applicable month for the 2019 Share Repurchase Program. On August 3, 2022, the Company’s Board of Directors authorized an additional stock repurchase program for up to $200 million of shares of its common stock (the “2022 Share Repurchase Program”). The 2019 Share Repurchase Program and 2022 Share Repurchase Program have no time limit and may be suspended for periods or discontinued at any time.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
None.
ITEM 5. OTHER INFORMATION
None.
32
ITEM 6. EXHIBITS
Exhibit No. |
|
Description |
|
Filed with This Form 10-Q |
|
Incorporated by Reference |
||||
|
|
|
Form |
|
Filing Date |
|
Exhibit No. |
|||
|
|
|
|
|
|
|
|
|
|
|
3.1 |
|
|
|
|
S-3 |
|
September 29, 1997 |
|
3.1 |
|
|
|
|
|
|
|
|
|
|
|
|
3.2 |
|
Amended & Restated By-Laws, as Amended and Restated May 26, 2022 |
|
X |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.3 |
|
|
|
|
8-K |
|
March 21, 2007 |
|
3.4 |
|
|
|
|
|
|
|
|
|
|
|
|
10.1* |
|
|
X |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.2* |
|
|
X |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31.1 |
|
Rule 13a—14(a)/15d—14(a) certification of principal executive officer |
|
X |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31.2 |
|
Rule 13a—14(a)/15d—14(a) certification of principal accounting officer |
|
X |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32.1 |
|
|
X |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101 |
|
The following financial information from the ABIOMED, Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, formatted in inline Extensible Business Reporting Language (XBRL): (i) Condensed Consolidated Balance Sheets (Unaudited) as of June 30, 2022 and March 31, 2022; (ii) Condensed Consolidated Statements of Operations (Unaudited) for the three months ended June 30, 2022 and 2021; (iii) Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) for the three months ended June 30, 2022 and 2021; (iv) Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) for the three months ended June 30, 2022 and 2021 (v) Condensed Consolidated Statements of Cash Flows (Unaudited) for the three months ended June 30, 2022 and 2021; and (vi) Notes to Condensed Consolidated Financial Statements (Unaudited). |
|
X |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
104 |
|
Cover page from the ABIOMED, Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 2022 formatted in iXBRL and contained in Exhibit 101 |
|
X |
|
|
|
|
|
|
* Management contract or compensatory plan, contract or arrangement.
33
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
ABIOMED, Inc. |
|
|
|
Date: August 4, 2022 |
|
/s/ TODD A. TRAPP |
|
|
Todd A. Trapp |
|
|
Executive Vice President and Chief Financial Officer |
|
|
(Authorized Signatory) |
34
Exhibit 3.2
Amended and Restated
By-Laws
Of
ABIOMED, Inc.
A Delaware Corporation
As Amended and Restated May 26, 2022
TABLE OF CONTENTS
Page
Article I. Stockholders |
1 |
|
Section 1.1. |
Annual Meeting |
1 |
Section 1.2. |
Special Meetings |
1 |
Section 1.3. |
Notice of Meeting |
1 |
Section 1.4. |
Quorum |
2 |
Section 1.5. |
Voting and Proxies |
2 |
Section 1.6. |
Action at Meeting |
2 |
Section 1.7. |
Action Without Meeting |
2 |
Section 1.8. |
Voting of Shares of Certain Holders |
2 |
Section 1.9. |
Stockholder Lists |
3 |
Section 1.10. |
Conduct of Meetings |
3 |
Board of Directors |
4 |
|
Section 2.1. |
Definitions |
4 |
Section 2.2. |
Powers |
5 |
Section 2.3. |
Number of Directors: Qualifications |
5 |
Section 2.4. |
Nomination of Directors; Proposals for Other Business |
5 |
Section 2.5. |
Election and Term of Office |
20 |
Section 2.6. |
Vacancies |
20 |
Section 2.7. |
Enlargement of the Board |
20 |
Section 2.8. |
Resignation |
20 |
Section 2.9. |
Removal |
20 |
Section 2.10 |
Meetings |
20 |
Section 2.11. |
Notice of Meeting |
21 |
Section 2.12. |
Agenda |
21 |
Section 2.13. |
Quorum |
21 |
Section 2.14. |
Action at Meeting |
21 |
Section 2.15. |
Action Without Meeting |
21 |
Section 2.16. |
Committees |
21 |
ARTICLE III. Officers |
22 |
|
Section 3.1. |
Enumeration |
22 |
Section 3.2. |
Election |
22 |
Section 3.3. |
Qualification |
22 |
Section 3.4. |
Tenure |
22 |
Section 3.5. |
Removal |
22 |
Section 3.6. |
Resignation |
22 |
Section 3.7. |
Vacancies |
22 |
Section 3.8. |
Chairman of the Board |
22 |
Section 3.9. |
Chief Executive Officer |
22 |
Section 3.10. |
President |
23 |
Section 3.12. |
Secretary and Assistant Secretaries |
23 |
Section 3.13. |
Other Powers and Duties |
23 |
ARTICLE IV. Capital Stock |
23 |
|
Section 4.1. |
Stock Certificates |
23 |
Section 4.2. |
Transfer of Shares |
23 |
Section 4.3. |
Record Holders |
24 |
Page
Section 4.4. |
Record Date |
24 |
Section 4.5. |
Transfer Agent and Registrar for Shares of Corporation |
24 |
Section 4.6. |
Loss of Certificates |
25 |
Section 4.7. |
Restrictions on Transfer |
25 |
Section 4.8. |
Multiple Classes of Stock |
25 |
ARTICLE V. Dividends |
25 |
|
Section 5.1. |
Declaration of Dividends |
25 |
Section 5.2. |
Reserves |
25 |
ARTICLE VI. Powers of Officers to Contract with the Corporation |
25 |
|
ARTICLE VII. Indemnification |
26 |
|
Section 7.1. |
Definitions |
26 |
Section 7.2. Right to Indemnification in General |
27 |
|
Section 7.4. |
Proceedings by or in the Right of the Corporation |
27 |
Section 7.5. |
Indemnification of a Party Who is Wholly or Partly Successful |
28 |
Section 7.6. |
Indemnification for Expenses of a Witness |
28 |
Section 7.7. |
Advancement of Expenses |
28 |
Section 7.9. |
Method of Determination |
30 |
Section 7.10. |
Presumptions and Effect of Certain Proceedings |
30 |
Section 7.11. |
Non-Exclusivity |
30 |
Section 7.12. |
Insurance |
30 |
Section 7.13. |
No Duplicative Payment |
30 |
Section 7.14. |
Severability |
31 |
ARTICLE VIII. Miscellaneous Provisions |
31 |
|
Section 8.1. |
Certificate of Incorporation |
31 |
Section 8.2. |
Fiscal Year |
31 |
Section 8.3. |
Corporate Seal |
31 |
Section 8.4. |
Execution of Instruments |
31 |
Section 8.5. |
Voting of Securities |
31 |
Section 8.6. |
Evidence of Authority |
31 |
Section 8.7. |
Corporate Records |
31 |
Section 8.8. |
Charitable Contributions |
32 |
ARTICLE IX. Amendments |
32 |
|
Section 9.1. |
Amendment by Stockholders |
32 |
Section 9.2. |
Amendment by Board of Directors |
32 |
By-Laws
OF
ABIOMED, Inc.
(A Delaware Corporation) (the “Corporation” or the “corporation”)
Article I.
Stockholders
Section 1.1. Annual Meeting. An annual meeting of the stockholders for the election of directors to succeed those whose terms expire and for the transaction of such other business as may properly come before the meeting shall be held at the place, if any, within or without the State of Delaware, on the date and at the time that the board of directors shall each year fix. Unless stated otherwise in the notice of the annual meeting of the stockholders of the corporation, such annual meeting shall be at the principal office of the corporation.
Section 1.2. Special Meetings. Special meetings of the stockholders may be called at any time by the chairman of the board of directors, the chief executive officer or by the board of directors. Special meetings of the stockholders shall be held at such time, date and place, if any, within or outside of the State of Delaware as may be designated in the notice of such meeting. Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the notice of meeting.
Section 1.3. Notice of Meeting. A written notice stating the place, if any (or the means of remote communication by which stockholders and proxy holders may be deemed to be present in person) date, and hour of each meeting of the stockholders, and, in the case of a special meeting, the purposes for which the meeting is called, shall be delivered personally or mailed in a postage prepaid envelope or, to the extent and in the manner permitted by applicable law, by any form of electronic transmission (with the consent of the stockholder to the extent required by applicable law), not less than 10 nor more than 60 days before the date of such meeting, to each person who appears on the stock books and records of the Corporation as a stockholder entitled to vote at such meeting and to each stockholder who under the Certificate of Incorporation or these By-Laws is entitled to such notice. Notices are deemed given (i) if by mail, when deposited in the United States mail, postage prepaid, directed to the stockholder at such stockholder's address as it appears on the records of the Corporation, or, if a stockholder shall have filed with the secretary a written request that notices to such stockholder be mailed to some other address, then directed to such stockholder at such other address; (ii) if by facsimile, when directed to a number at which the stockholder has consented to receive notice; (iii) if by electronic mail, when directed to an electronic mail address at which the stockholder has consented to receive such notice; (iv) if by posting on an electronic network together with a separate notice to the stockholder of such specific posting, upon the later to occur of (A) such posting and (B) the giving of such separate notice of such posting; and (v) if by any other form of electronic transmission, when directed to the stockholder as required by law and, to the extent required by applicable law, in the manner consented to by the stockholder. An affidavit of the mailing or other means of giving any notice of any stockholders' meeting, executed by the secretary, assistant corporate secretary or any transfer agent of the Corporation giving the notice, shall be prima facie evidence of the giving of such notice or report. Notice shall be deemed to have been given to all stockholders of record who share an address if notice is given in accordance with the “householding” rules set forth in Rule 14a-3(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Section 233 of the General Corporation Law of the State of Delaware. The requirement of notice to any stockholder may be waived by a written waiver of notice, executed before or after the meeting by the stockholder or his attorney thereunto duly authorized, and filed with the records of the meeting, or if communication with such stockholder is unlawful, or by attendance at the meeting without protesting prior thereto or at its commencement the lack of notice. A waiver of notice of any regular or special meeting of the
1
stockholders need not specify the purposes of the meeting. If a meeting is adjourned to another time or place, notice need not be given of the adjourned meeting if the time and place are announced at the meeting at which the adjournment is taken, except that if the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.
Section 1.4. Quorum. The holders of a majority in interest of all stock issued, outstanding and entitled to vote at a meeting shall constitute a quorum. Any meeting may be adjourned from time to time by a majority of the votes properly cast upon the question, whether or not a quorum is present.
Section 1.5. Voting and Proxies. Stockholders shall have one vote for each share of stock entitled to vote owned by them of record according to the books of the corporation, unless otherwise provided by law or by the Certificate of Incorporation. Stockholders may vote either in person or by written proxy, but no proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. Proxies shall be filed with the secretary of the meeting, or of any adjournment thereof. Except as otherwise limited therein, proxies shall entitle the persons authorized thereby to vote at any adjournment of such meeting. A proxy purporting to be executed by or on behalf of a stockholder shall be deemed valid unless challenged at or prior to its exercise and the burden of proving invalidity shall rest on the challenger. A proxy with respect to stock held in the name of two or more persons shall be valid if executed by one of them unless at or prior to exercise of the proxy the corporation receives a specific written notice to the contrary from any one of them.
Section 1.6. Action at Meeting. When a quorum is present at any meeting, a plurality of the votes properly cast for election to any office shall elect to such office, and a majority of the votes properly cast upon any question other than election to an office shall decide such question, except where a larger vote is required by law, the Certificate of Incorporation or these By- Laws. No ballot shall be required for any election unless requested by a stockholder present or represented at the meeting and entitled to vote in the election.
Section 1.7. Action Without Meeting. No action required to be taken or which may be taken at any annual or special meeting of stockholders of the Corporation may be taken by stockholders without a meeting, and the power of stockholders to consent in writing, without a meeting, to the taking of any action is specifically denied.
Section 1.8. Voting of Shares of Certain Holders. Shares of stock of the corporation standing in the name of another corporation, domestic or foreign, may be voted by such officer, agent, or proxy as the By-Laws of such corporation may prescribe, or, in the absence of such provision, as the board of directors of such corporation may determine.
Shares of stock of the corporation standing in the name of a deceased person, a minor ward or an incompetent person, may be voted by his administrator, executor, court-appointed guardian or conservator without a transfer of such shares into the name of such administrator, executor, court appointed guardian or conservator. Shares of capital stock of the corporation standing in the name of a trustee may be voted by him. Shares of stock of the corporation standing in the name of a receiver may be voted by such receiver, and shares held by or under the control of a receiver may be voted by such receiver without the transfer thereof into his name if authority so to do be contained in an appropriate order of the court by which such receiver was appointed. A stockholder whose shares are pledged shall be entitled to vote such shares until the shares have been transferred into the name of the pledgee, and thereafter the pledgee shall be entitled to vote the shares so transferred. Shares of its own stock belonging to this corporation shall not be voted, directly or indirectly, at any meeting and shall not be counted in determining the total number of outstanding shares at any given time, but shares of
2
its own stock held by the corporation in a fiduciary capacity may be voted and shall be counted in determining the total number of outstanding shares.
Section 1.9. Stockholder Lists. The secretary (or the corporation’s transfer agent or other person authorized by these By-Laws or by law) shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof and may be inspected by any stockholder who is present.
Section 1.10. Conduct of Meetings. The date and time of the opening and the closing of the polls for each matter upon which the stockholders will vote at a meeting shall be announced at the meeting by the person presiding over the meeting. The board of directors may adopt by resolution such rules and regulations for the conduct of the meeting of stockholders as it shall deem appropriate. Except to the extent inconsistent with such rules and regulations as adopted by the board of directors, the person presiding over any meeting of stockholders shall have the right and authority to convene and to adjourn the meeting, to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such presiding person, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the board of directors or prescribed by the presiding person of the meeting, may include, without limitation, the following: (i) the establishment of an agenda or order of business for the meeting; (ii) rules and procedures for maintaining order at the meeting and the safety of those present; (iii) limitations on attendance at or participation in the meeting to stockholders of record of the Corporation, their duly authorized and constituted proxies or such other persons as the presiding person of the meeting shall determine; (iv) restrictions on entry to the meeting after the time fixed for the commencement thereof; and (v) limitations on the time allotted to questions or comments by participants. The presiding person at any meeting of stockholders, in addition to making any other determinations that may be appropriate to the conduct of the meeting, shall, if the facts warrant, determine and declare to the meeting that a matter or business was not properly brought before the meeting and if such presiding person should so determine, such presiding person shall so declare to the meeting and any such matter or business not properly brought before the meeting shall not be transacted or considered. Unless and to the extent determined by the board of directors or the person presiding over the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure.
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ARTICLE II.
Board of Directors
Section 2.1. Definitions. For purposes of this Article II, the following terms shall have the meanings indicated:
(a) “Proposing Person” means any of the following persons: (i) the stockholder of record providing the notice of nominations or business proposed to be brought before a stockholders’ meeting, (ii) the beneficial owner(s), if different, on whose behalf the nominations or business proposed to be brought before a stockholders’ meeting is made and (iii) any affiliate or associate of such stockholder of record or beneficial owner.
(b) “Public Announcement” means disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange.
(c) “Solicitation Statement” means a statement whether or not the stockholder giving the notice and/or the other Proposing Person(s), if any, will deliver a proxy statement and form of proxy to holders of, in the case of a business proposal, at least the percentage of voting power of all of the shares of capital stock of the Corporation required under applicable law to approve the proposal or, in the case of a nomination or nominations, at least the percentage of voting power of all of the shares of capital stock of the Corporation reasonably believed by such Proposing Person to be sufficient to elect the nominee or nominees proposed to be nominated by such Proposing Person.
(d) “Synthetic Equity Interest” means any transaction, agreement or arrangement (or series of transactions, agreements or arrangements), including, without limitation, any derivative, swap, hedge, repurchase or so-called “stock borrowing” agreement or arrangement, the purpose or effect of which is to, directly or indirectly: (i) give a person or entity economic benefit and/or risk similar to ownership of shares of any class or series of capital stock of the Corporation, in whole or in part, including due to the fact that such transaction, agreement or arrangement provides, directly or indirectly, the opportunity to profit or avoid a loss from any increase or decrease in the value of any shares of any class or series of capital stock of the Corporation, (ii) mitigate loss to, reduce the economic risk of or manage the risk of share price changes for, any person or entity with respect to any shares of any class or series of capital stock of the Corporation, (iii) otherwise provide in any manner the opportunity to profit or avoid a loss from any decrease in the value of any shares of any class or series of capital stock of the Corporation, or (iv) increase or decrease the voting power of any person or entity with respect to any shares of any class or series of capital stock of the Corporation.
(e) “Timely Notice” means a Proposing Person’s written notice, which shall be received by the secretary of the Corporation at the principal executive offices of the Corporation not later than the close of business on the ninetieth (90th) day nor earlier than the close of business on the one hundred twentieth (120th) day prior to the one-year anniversary of the preceding year’s annual meeting of stockholders; provided, however, that in the event the annual meeting of stockholders is held more than thirty (30) days before or more than sixty (60) days after such anniversary date, or if no annual meeting of stockholders was held in the preceding year, to be timely, the notice by the Proposing Person must be received by the secretary of the Corporation at the principal executive offices of the Corporation not later than the close of business on the later of the ninetieth (90th) day prior to the scheduled date of such annual meeting of stockholders or the tenth (10th) day following the day on which Public Announcement of the date of such meeting is first made.
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Section 2.2. Powers. Except as reserved to the stockholders by law, by the Certificate of Incorporation or by these By-Laws, the business of the corporation shall be managed under the direction of the board of directors, who shall have and may exercise all of the powers of the corporation. In particular, and without limiting the foregoing, the board of directors shall have the power to issue or reserve for issuance from time to time the whole or any part of the capital stock of the corporation which may be authorized from time to time to such person, for such consideration and upon such terms and conditions as they shall determine, including the granting of options, warrants or conversion or other rights to stock.
Section 2.3. Number of Directors: Qualifications. The board of directors shall consist of such number of directors, not less than 3 nor more than 12, as shall be fixed initially by the incorporator(s) and thereafter by the board of directors. No director need be a stockholder.
Section 2.4. Nomination of Directors; Proposals for Other Business.
(a) Annual Meetings of Stockholders.
(1) Nominations for the election of directors or proposals for other business to be brought before an annual meeting of stockholders may, in each case, be made at an annual meeting of stockholders only (i) if brought before the meeting by the Corporation and specified in the Corporation’s notice of meeting delivered pursuant to Section 1.3, (ii) if brought before such annual meeting by or at the direction of the board of directors, (iii) if brought before such annual meeting by any stockholder who (a) is entitled to vote for the election of directors at the meeting, (b) was a stockholder of record (and, with respect to any beneficial owner, if different, on whose behalf any nomination or proposal for other business is made, only if such beneficial owner of shares of stock of the Corporation) at the time of giving of notice provided for in these By-Laws and at the time of such annual meeting, (c) is present (in person or by proxy) at the meeting and (d) complies with the notice procedures set forth in these By-Laws as to such nomination or proposal for other business or (iv) in the case of stockholder nominations to be included in the Corporation’s proxy statement for such annual meeting, if brought before such annual meeting by any Eligible Holder (as defined in Section 2.4(d) of these By-Laws) who satisfies the requirements set forth in Section 2.4(d) of these By-Laws. For the avoidance of doubt, other than matters properly brought under Rule 14a-8 (or any successor rule) under the Exchange Act, the foregoing sentence shall describe the exclusive means for a stockholder to bring nominations or other business before an annual meeting, and such stockholder must comply with the notice and other procedures set forth in this Section 2.4 to bring such nominations or other business properly before an annual meeting of stockholders.
(2) For nominations or other business to be properly brought before an annual meeting of stockholders by a stockholder pursuant to Section 2.4(a)(1)(iii) above, the Proposing Person must (i) have given Timely Notice thereof in writing and in proper form, delivered or mailed by first class United States mail, postage prepaid, to the secretary of the Corporation and (ii) have provided any updates or supplements to such notice at the times and in the forms required by this Section 2.4 (other than Section 2.4(d). In no event shall any adjournment of an annual meeting of stockholders or the announcement thereof commence a new time period (or extend any time period) for the giving of a stockholder’s notice. To be in proper form, such stockholder’s Timely Notice shall set forth:
(A) as to each Proposing Person:
(i) (a) the name and address of the Proposing Person giving the notice (including, if applicable, as they appear on the Corporation’s books); (b)
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the class or series and number of all shares of capital stock of the Corporation which are, directly or indirectly, owned of record or beneficially (for purposes of these By-Laws, as such term is defined in Rule 13d-3 promulgated under the Exchange Act) by such Proposing Person or any of its affiliates or associates (for purposes of these By-Laws, as such terms are defined in Rule 12b-2 promulgated under the Exchange Act), including any shares of any class or series of capital stock of the Corporation as to which such Proposing Person or any of its affiliates or associates has a right to acquire beneficial ownership at any time in the future; (c) all Synthetic Equity Interests (as defined below) in which such Proposing Person or any of its affiliates or associates, directly or indirectly, holds an interest including a description of the material terms of each such Synthetic Equity Interest, including without limitation, identification of the counterparty to each such Synthetic Equity Interest and disclosure, for each such Synthetic Equity Interest, as to (1) whether or not such Synthetic Equity Interest conveys any voting rights, directly or indirectly, in such shares to such Proposing Person, (2) whether or not such Synthetic Equity Interest is required to be, or is capable of being, settled through delivery of such shares and (3) whether or not such Proposing Person and/or, to the extent known, the counterparty to such Synthetic Equity Interest has entered into other transactions that hedge or mitigate the economic effect of such Synthetic Equity Interest; (d) any proxy (other than a revocable proxy given in response to a public proxy solicitation made pursuant to, and in accordance with, Section 14(a) of the Exchange Act by way of a solicitation statement filed on Schedule 14A), agreement, arrangement, understanding or relationship pursuant to which such Proposing Person has or shares a right to, directly or indirectly, vote any shares of any class or series of capital stock of the Corporation; (e) any rights to dividends or other distributions on the shares of any class or series of capital stock of the Corporation, directly or indirectly, owned beneficially by such Proposing Person that are separated or separable from the underlying shares of the Corporation, and (f) any performance-related fees (other than an asset-based fee) that such Proposing Person, directly or indirectly, is entitled to based on any increase or decrease in the value of shares of any class or series of capital stock of the Corporation or any Synthetic Equity Interests (the disclosures to be made pursuant to the foregoing clauses (b) through (f), “Material Ownership Interests”); provided, however, that Material Ownership Interests shall not include any such disclosures with respect to the ordinary course business activities of any broker, dealer, commercial bank, trust company or other nominee who is a Proposing Person solely as a result of being the stockholder of record directed to prepare and submit the information required by this Section 2.4(a)(2)(A)(i) on behalf of a beneficial owner;
(ii) a description of the material terms of all agreements, arrangements or understandings (whether or not in writing) entered into by any Proposing Person, in the case of nominations, each person, if any, whom a Proposing Person proposes to nominate for election or re-election as a director(s) (each, a “Proposed Nominee”), or any of the Proposing Person’s respective affiliates or associates, with any other person for the
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purpose of acquiring, holding, disposing or voting of any shares of any class or series of capital stock of the Corporation;
(iii) (a) a description of all agreements, arrangements or understandings by and among any of the Proposing Persons, or by and among any Proposing Persons and any other person (including with any Proposed Nominee(s)), pertaining to the nomination(s) or other business proposed to be brought before the annual meeting of stockholders (which description shall identify the name of each other person who is party to such an agreement, arrangement or understanding) and (b) identification of the names and addresses of other stockholders (including beneficial owners) known by any of the Proposing Persons to support such nominations or other business proposal(s), and to the extent known, the class and number of all shares of the Corporation’s capital stock owned of record or beneficially by such other stockholder(s) or other beneficial owner(s);
(iv) in the case of nominations, a description of all direct and indirect compensation and other material monetary agreements, arrangements and understandings during the past three (3) years, and any other material relationships, between or among any Proposing Person, on the one hand, and each Proposed Nominee or his or her respective affiliates and associates, on the other hand, including, without limitation, all information that would be required to be disclosed pursuant to Item 404 under Regulation S-K of the Securities and Exchange Commission if such Proposing Person were the “registrant” for purposes of such regulation and the Proposed Nominee were a director or executive officer of such registrant;
(v) a representation that such Proposing Person is a record holder of the stock of the Corporation at the timing of the giving of the notice, will be entitled to vote at the annual meeting of stockholders and intends to appear in person or by proxy at such annual meeting to nominate the Proposed Nominees named in its notice or, for any proposal that relates to any business other than nominations for election of directors, to bring such business before the annual meeting;
(vi) with respect to nominations, a written representation and agreement that the Proposed Nominee (a) understands his or her duties as a director under the General Corporation Law of the State of Delaware and agrees to act in accordance with those duties while serving as a director, (b) is not or will not become a party to any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such nominee, if elected as a director, will act or vote as a director on any issue or question to be decided by the board of directors, in any case, to the extent that such arrangement, understanding, commitment or assurance (1) could limit or interfere with the Proposed Nominee’s ability to comply, if elected as director of the Corporation, with his or her fiduciary duties under applicable law or with Corporation policies and guidelines applicable to directors generally or (2) has not been disclosed to the Corporation prior to or concurrently with the Proposing Person’s submission of the nomination, (c) if elected as a
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director, will comply with all applicable laws and stock exchange listing standards and the Corporation’s policies and guidelines applicable to directors, (d) is not or will not become a party to any direct or indirect compensation or other monetary agreement, arrangement or understanding with any person or entity other than the Corporation (including, without limitation, any agreement, arrangement or understanding with respect to any direct or indirect compensation, reimbursement or indemnification) in connection with service or action as a director that has not been disclosed to the Corporation prior to or concurrently with the Proposing Person’s submission of the nomination, and (e) will provide (1) facts and other information in all communications with the Corporation and its stockholders that are or will be true and correct in all material respects and do not and will not omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading and (2) all completed and signed questionnaires required generally of the Corporation’s directors;
(vii) a Solicitation Statement; and
(viii) any other information relating to such Proposing Person or the proposed business (including, as applicable, information about any Proposed Nominee, including such Proposed Nominee’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected) that would be required to be disclosed in a proxy statement or other filing required to be made in connection with solicitations of proxies in support of the nomination for election of directors or the other business proposed to be brought before the annual meeting of stockholders pursuant to Section 14(a) of the Exchange Act.
(B) with respect to nominations, the following information as to each Proposed Nominee:
(i) the name, age, business address and, if known, residence address of the Proposed Nominee;
(ii) the principal occupation or employment of the Proposed Nominee; and
(iii) the class or series and number of shares of capital stock of the Corporation that are, directly or indirectly, owned of record or beneficially by the Proposed Nominee, including any shares of any class or series of the capital stock of the Corporation as to which such Proposed Nominee has a right to acquire beneficial ownership at any time in the future.
(C) as to any other business other than nominations that the Proposing Person proposes to bring before the annual meeting of stockholders, in addition to the information set forth in Section2.4(a)(2)(A):
(i) a reasonably brief description of the business desired to be brought before the annual meeting of stockholders, the reasons for conducting such business at the annual meeting of stockholders, and any material interest in such business of each Proposing Person; and
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(ii) the text of the proposal or the business (including the text of any resolutions proposed for resolution).
(3) The Corporation may also require any Proposed Nominee for election to the board of directors of the Corporation to furnish such other information (i) as may be reasonably required by the Corporation to determine the eligibility of such Proposed Nominee to serve as an independent director of the Corporation in accordance with the Corporation’s policies and guidelines applicable to directors as then in effect or (ii) that could be material to a reasonable stockholder’s understanding of the independence, or lack thereof, of such Proposed Nominee.
(4) A Proposing Person providing Timely Notice of nominations or business proposed to be brought before an annual meeting of stockholders shall further update and supplement such notice, if necessary, so that the information (including, without limitation, the Material Ownership Interests information) provided or required to be provided in such notice pursuant to these By-Laws shall be true and correct as of the record date for the annual meeting of stockholders and as of the date that is ten (10) business days prior to such annual meeting of stockholders or any adjournment or postponement thereof, and such update and supplement, (i) where required to be made as of the record date, shall be received by the secretary at the principal executive offices of the Corporation not later than the close of business on the fifth (5th) business day after the record date for the annual meeting of stockholders, and (ii) where required to be made as of ten (10) business days prior to the annual meeting of stockholders or any adjournment or postponement thereof, shall be made not later than the close of business on the eighth (8th) business day prior to the date of the annual meeting of stockholders or, if practicable, any adjournment or postponement thereof (and, if not practicable, on the first practicable date prior to the date to which the annual meeting of stockholders has been adjourned or postponed).
(5) For nominations or other business to be properly brought before an annual meeting of stockholders by a stockholder pursuant to Section 2.4(a)(1)(iv) above, the Nominating Person must (i) have given timely notice thereof in writing and in proper form in accordance with Section 2.4(c) of these By-Laws, delivered or mailed by first class United States mail, postage prepaid, to the secretary of the Corporation and (ii) satisfy all other requirements of Section 2.4(c) of these By-Laws.
(b) Special Meetings of Stockholders.
Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting by or at the direction of the Corporation’s board of directors. Nominations of persons for election to the board of directors may be made at a special meeting of stockholders at which directors are to be elected (i) by or at the direction of the board of directors or (ii) provided that the board of directors has determined that the special meeting of stockholders is being called in accordance with Section 1.2 for the purpose of electing directors, by any stockholder of the Corporation who (1) is a stockholder of record both at the time of giving of notice provided for in this Section 2.4(b) and at the time of the meeting, (2) is entitled to vote at the meeting, and (3) complies with the provisions of this Section 2.4(b). For nominations or other business to be properly brought before a special meeting of stockholders by a stockholder pursuant to Section 2.4(b)(ii) above, the stockholder’s notice shall contain all of the information required by Section 2.4(a)(2) and (3), as updated consistent with the procedures set forth in Section 1.3(a)(4), and be received by the secretary of the Corporation at the principal executive offices of the Corporation not earlier than the close of business on the one hundred
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twentieth (120th) day prior to the scheduled date for such special meeting of stockholders and not later than the close of business on the later of the ninetieth (90th) day prior to the scheduled date of such special meeting of stockholders or the tenth (10th) day following the day of the Public Announcement of the date of such meeting and of the nominees proposed by the board of directors to be elected at the special meeting of stockholders is first made. The announcement of a postponement of a special meeting of stockholders after notice of the meeting has been given or an adjournment of a special meeting of stockholders shall not commence a new time period for the giving of a stockholder’s notice as described in this Section 2.4(b).
(c) Inclusion of Proxy Access Nominee in Proxy Statement.
(1) Subject to the provisions of this Section 2.4(c), if expressly requested in the relevant Nomination Notice (as defined below), the Corporation shall include in its proxy statement for any annual meeting of stockholders (but not at any special meeting of stockholders):
(A) the name of any person nominated for election (the “Proxy Access Nominee”), which shall also be included on the Corporation’s form of proxy and ballot, by any Nominating Person (as defined below);
(B) disclosure about the Proxy Access Nominee and the Nominating Person required under the rules of the Securities and Exchange Commission or other applicable law to be included in the proxy statement;
(C) any statement included by the Nominating Person in the Nomination Notice for inclusion in the proxy statement in support of the Proxy Access Nominee’s election to the board of directors (subject, without limitation, to Section 2.4(c)(5)(B)) if such statement does not exceed 500 words; and
(D) any other information that the Corporation or the board of directors determines, in their discretion, to include in the proxy statement relating to the nomination of the Proxy Access Nominee, including, without limitation, (i) any statement in opposition to the nomination, (ii) any of the information provided pursuant to this Section 2.4(c) and (iii) any solicitation materials or related information with respect to the Proxy Access Nominee.
For purposes of this Section 2.4(c), any determination to be made by the board of directors may be made by the board of directors, a committee of the board any officer of the Corporation designated by the board of directors or a committee of the board and any such determination shall be final and binding on the Corporation, any Nominating Person, any Eligible Holder, any Proxy Access Nominee and any other person so long as made in good faith (without any further requirements).
(2) Maximum Number of Proxy Access Nominees.
(A) The Corporation shall not be required to include in the proxy statement for an annual meeting of stockholders more Proxy Access Nominees than that number of directors constituting the greater of (i) two (2) or (ii) twenty percent (20%) of the total number of directors of the Corporation on the last day on which a Nomination Notice may be submitted pursuant to this Section 2.4(c) (rounded down to the nearest whole number) (the “Maximum Number”). In the event that one or more vacancies for any reason occurs on the board of directors after the deadline set forth in Section 2.4(c)(4) below but before the date of the annual
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meeting, and the board of directors resolves to reduce the size of the board in connection therewith, the Maximum Number shall be calculated based on the number of directors in office as so reduced. The Maximum Number for a particular annual meeting shall be reduced by (i) Proxy Access Nominees who are subsequently withdrawn, (ii) Proxy Access Nominees that the board of directors itself decides to nominate for election at such annual meeting and (iii) the number of incumbent directors of the Corporation who had been Proxy Access Nominees with respect to any of the preceding two annual meetings of stockholders and whose reelection at the upcoming annual meeting is being recommended by the board of directors.
(B) If the number of Proxy Access Nominees pursuant to this Section 2.4(c) for any annual meeting of stockholders exceeds the Maximum Number then, promptly upon notice from the Corporation, each Nominating Person will select one Proxy Access Nominee for inclusion in the proxy statement until the Maximum Number is reached, going in order of the amount (largest to smallest) of the ownership position as disclosed in each Nominating Person’s Nomination Notice, with the process repeated if the Maximum Number is not reached after each Nominating Person has selected one Proxy Access Nominee. If, after the deadline for submitting a Nomination Notice as set forth in Section 2.4(c)(4), a Nominating Person becomes ineligible or withdraws its nomination or a Proxy Access Nominee becomes unwilling to serve on the board of directors, whether before or after the mailing of the proxy statement, then the nomination shall be disregarded, and the Corporation (i) shall not be required to include in its proxy statement or on any ballot or form of proxy the disregarded Proxy Access Nominee or any successor or replacement nominee proposed by the Nominating Person or by any other Nominating Person and (ii) may otherwise communicate to its stockholders, including without limitation by amending or supplementing its proxy statement or ballot or form of proxy, that the Proxy Access Nominee will not be included as a Proxy Access Nominee in the proxy statement or on any ballot or form of proxy and will not be voted on at the annual meeting.
(3) Eligibility of Nominating Person.
(A) An “Eligible Holder” is a person who has either (i) been a record holder of the shares of stock used to satisfy the eligibility requirements in this Section 2.4(c)(3) continuously for the three-year period specified in Section 2.4(c)(3)(B) below or (ii) provides to a Secretary of the Corporation, within the time period referred to in Section 2.4(c)(4), evidence of continuous ownership of such shares for such three-year period from one or more securities intermediaries in a form that the board of directors determines would be deemed acceptable for purposes of a shareholder proposal under Rule 14a-8(b)(2) under the Exchange Act (or any successor rule).
(B) An Eligible Holder or group of up to twenty (20) Eligible Holders may submit a nomination in accordance with this Section 2.4(c) only if the person or group (in the aggregate) has continuously owned at least the Minimum Number (as defined below) of shares of the Corporation’s stock throughout the three (3) year period preceding and including the date of submission of the Nomination Notice, and continues to own at least the Minimum Number through the date of the annual meeting. Each Eligible Holder or group of up to twenty (20) Eligible Holders that submits a nomination in accordance with this Section 2.4(c) and has
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satisfied, as determined by the board of directors, all applicable conditions and complied with all applicable procedures set forth in this Section 2.4(c) is a “Nominating Person”. A group of funds that are (i) under common management and investment control, (ii) under common management and funded primarily by a single employer or (iii) a “group of investment companies,” as such term is defined in Section 12(d)(1)(G)(ii) of the Investment Company Act of 1940, as amended, shall be treated as one Eligible Holder if such Eligible Holder shall provide together with the Nomination Notice documentation reasonably satisfactory to the Corporation that demonstrates that the funds meet the criteria set forth in clauses (i), (ii) or (iii) of this Section 2.4(c)(3)(B). For the avoidance of doubt, in the event of a nomination by a Nominating Person that includes more than one Eligible Holder, any and all requirements and obligations for an individual Eligible Holder that are set forth in this Section 2.4(c), including the minimum holding period, shall apply to each individual Eligible Holder comprising the Nominating Person; provided, however, that the Minimum Number shall apply to the ownership of the Nominating Person in the aggregate. Should any Eligible Holder withdraw from a group of Eligible Holders constituting a Nominating Person at any time prior to the annual meeting of stockholders, the Nominating Person shall only be deemed to own the shares held by the remaining Eligible Holders. As used in this Section 2.4(c), any reference to a “group” or “group of Eligible Holders” refers to any Nominating Person that consists of more than one Eligible Holder and to all the Eligible Holders that make up such Nominating Person.
(C) The “Minimum Number” of shares of the Corporation’s stock means three percent (3%) of the number of outstanding shares of stock as of the most recent date for which such amount is given in any filing by the Corporation with the Securities and Exchange Commission prior to the submission of the Nomination Notice.
(D) For purposes of this Section 2.4(c), an Eligible Holder “owns” only those outstanding shares of the Corporation as to which the Eligible Holder possesses both (i) the full voting and investment rights pertaining to the shares and (ii) the full economic interest in (including the opportunity for profit and risk of loss on) such shares; provided that the number of shares calculated in accordance with clauses (i) and (ii) shall not include any shares (A) sold by such Eligible Holder or any of its affiliates in any transaction that has not been settled or closed, (B) purchased by such Eligible Holder or any of its affiliates but the purchase has not yet been settled or closed, (C) borrowed by such Eligible Holder or any of its affiliates for any purpose or purchased by such Eligible Holder or any of its affiliates pursuant to an agreement to resell or subject to any other obligation to resell to another person, or (D) subject to any option, warrant, forward contract, swap, contract of sale, other derivative or similar agreement entered into by such Eligible Holder or any of its affiliates, whether any such instrument or agreement is to be settled with shares or with cash based on the notional amount or value of outstanding shares of the Corporation, in any such case which instrument or agreement has, or is intended to have, the purpose or effect of (x) reducing in any manner, to any extent or at any time in the future, such Eligible Holder’s or any of its affiliates’ full right to vote or direct the voting of any such shares, and/or (y) hedging, offsetting, or altering to any degree, gain or loss arising from the full economic ownership of such shares by such Eligible Holder or any of its affiliates.
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An Eligible Holder “owns” shares held in the name of a nominee or other intermediary so long as the Eligible Holder retains the right to instruct how the shares are voted with respect to the election of directors and possesses the full economic interest in the shares. An Eligible Holder’s ownership of shares shall be deemed to continue during any period in which the Eligible Holder has delegated any voting power by means of a proxy, power of attorney, or other similar instrument or arrangement that is revocable at any time by the Eligible Holder. An Eligible Holder’s ownership of shares shall be deemed to continue during any period in which the Eligible Holder has loaned such shares provided that the Eligible Holder has the power to recall such loaned shares within a reasonable period of time and will recall such loaned shares as of the date of the annual meeting. The terms “owned,” “owning” and other variations of the word “own” shall have correlative meanings. Whether outstanding shares of the Corporation are “owned” for these purposes shall be determined by the board of directors.
(E) No Eligible Holder shall be permitted to be a part of more than one group of Eligible Holders constituting a Nominating Person, and if any Eligible Holder appears as a member of more than one group, such Eligible Holder shall be deemed to be a member of the group of Eligible Holders that has the largest ownership position as reflected in the Nomination Notice.
(4) Nomination Notice.
To nominate a Proxy Access Nominee, the Nominating Person must, no later than the close of business on the one hundred and twentieth (120th) day nor earlier than the close of business on the one hundred and fiftieth (150th) day prior to the one-year anniversary of the preceding year’s annual meeting of stockholders, submit to the secretary of the Corporation at the principal executive office of the Corporation all of the following information and documents (collectively, the “Nomination Notice”); provided, however, that in the event the annual meeting of stockholders is held more than thirty (30) days before or more than sixty (60) days after such anniversary date, or if no annual meeting of stockholders was held in the preceding year, to be timely, the Nomination Notice shall be given in the manner provided herein not later than the close of business on the later of the one hundred and twentieth (120th) day prior to the scheduled date of such annual meeting of stockholders or the tenth (10th) day following the day on which Public Announcement of the date of such meeting is first made:
(A) A Schedule 14N (or any successor form) relating to the Proxy Access Nominee, completed and filed with the Securities and Exchange Commission by the Nominating Person as applicable, in accordance with Securities and Exchange Commission rules;
(B) A written notice of the nomination of such Proxy Access Nominee that includes the following additional information, agreements, representations and warranties by the Nominating Person (including each group member):
(i) the information required with respect to the nomination of directors pursuant to Section 2.4(a) of these By-Laws;
(ii) the details of any relationship that existed within the past three years and that would have been described pursuant to Item 6(e) of Schedule 14N
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(or any successor item) if it existed on the date of submission of the Schedule 14N;
(iii) a representation and warranty that the Nominating Person did not acquire, and is not holding, securities of the Corporation for the purpose or with the effect of influencing or changing control of the Corporation;
(iv) a representation and warranty that the Proxy Access Nominee’s candidacy or, if elected, Board membership would not violate applicable state or federal law or the rules of any stock exchange on which the Corporation’s securities are traded;
(v) a representation and warranty that the Proxy Access Nominee:
(1) is not aware of any information that would make the Proxy Access Nominee fail to be deemed independent under, and otherwise qualifies as independent under the bright-line standards of, the rules of the primary stock exchange on which the Corporation’s securities are traded;
(2) is not aware of any information that would make the Proxy Access Nominee fail to meet the audit committee, governance and nominating committee, and compensation committee independence requirements under the rules of the primary stock exchange on which the Corporation’s securities are traded;
(3) is not aware of any information that would make the Proxy Access Nominee fail to be a “non-employee director” for the purposes of Rule 16b-3 under the Exchange Act (or any successor rule);
(4) is not aware of any information that would make the Proxy Access Nominee fail to be an “outside director” for the purposes of Section 162(m) of the Internal Revenue Code (or any successor provision); and
(5) is not and has not been subject to any event specified in Rule 506(d)(1) of Regulation D (or any successor rule) under the Securities Act of 1933 or Item 401(f) of Regulation S-K (or any successor rule) under the Exchange Act, without reference to whether the event is material to an evaluation of the ability or integrity of the Proxy Access Nominee;
(vi) a representation and warranty that the Nominating Person satisfies the eligibility requirements set forth in Section 2.4(c)(3) and has provided evidence of ownership to the extent required by Section 2.4(c)(3)(A);
(vii) a representation and warranty that the Nominating Person intends to continue to satisfy the eligibility requirements described in Section 2.4(c)(3) through the date of the annual meeting and currently intends in good faith to continue to hold the Minimum Number of shares for at least one year following the annual meeting;
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(viii) details of any position of the Proxy Access Nominee as an officer or director of any competitor (that is, any entity that produces products or provides services that compete with or are alternatives to the principal products produced or services provided by the Corporation or its affiliates) of the Corporation, within the three years preceding the submission of the Nomination Notice;
(ix) details of any relationship between the Proxy Access Nominee and any entity that would require disclosure on Schedule 13D as if the Proxy Access Nominee was required to file a Schedule 13D with respect to the company;
(x) details of any shares of the Corporation owned by the Proxy Access Nominee that are (A) pledged by the Proxy Access Nominee or otherwise subject to a lien, charge or other encumbrance or (B) subject to any option, warrant, forward contract, swap, contract of sale, other derivative or similar agreement entered into by such Proxy Access Nominee, whether any such instrument or agreement is to be settled with shares or with cash based on the notional amount or value of outstanding shares of the Corporation, in any such case which instrument or agreement has, or is intended to have, the purpose or effect of (x) reducing in any manner, to any extent or at any time in the future, such Proxy Access Nominee’s full right to vote or direct the voting of any such shares, and/or (y) hedging, offsetting, or altering to any degree, gain or loss arising from the full economic ownership of such shares by such Proxy Access Nominee;
(xi) details of any compensatory, payment or other financial agreement, arrangement or understanding with any person or entity in connection with service or action as a director of the Corporation;
(xii) a representation and warranty that the Nominating Person will not engage in a “solicitation” within the meaning of Rule 14a-1(l) (without reference to the exception in Section 14a-(l)(2)(iv)) (or any successor rules) with respect to the annual meeting, other than with respect to its Proxy Access Nominee or any nominee of the board of directors;
(xiii) a representation and warranty that the Nominating Person will not use any proxy card other than the Corporation’s proxy card in soliciting stockholders in connection with the election of a Proxy Access Nominee at the annual meeting;
(xiv) if desired, a statement for inclusion in the proxy statement in support of the Proxy Access Nominee’s election to the Board of Directors, provided that such statement shall not exceed 500 words and shall fully comply with Section 14 of the Exchange Act and the rules and regulations thereunder, including Rule 14a-9; and
(xv) in the case of a nomination by a Nominating Person comprised of a group, the designation by all such Eligible Holders of one Eligible Holder that is authorized to act on behalf of the Nominating Person with respect to matters relating to the nomination, including withdrawal of the nomination;
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(C) An executed agreement, in a form deemed satisfactory by the board of directors, pursuant to which the Nominating Person (including in the case of a group, each Eligible Holder in that group) agrees:
(i) to comply with all applicable laws, rules and regulations in connection with the nomination, solicitation and election;
(ii) to file any written solicitation or other communication with the Corporation’s stockholders relating to one or more of the Corporation’s directors or director nominees or any Proxy Access Nominee with the Securities and Exchange Commission, regardless of whether any such filing is required under rule or regulation or whether any exemption from filing is available for such materials under any rule or regulation;
(iii) to assume all liability stemming from an action, suit or proceeding concerning any actual or alleged legal or regulatory violation arising out of any communication by the Nominating Person with the Corporation, its stockholders or any other person in connection with the nomination or election of directors, including, without limitation, the Nomination Notice;
(iv) to indemnify and hold harmless (jointly with all other Eligible Holders, in the case of a group of Eligible Holders) the Corporation and each of its directors, officers and employees individually against any liability, loss, damages, expenses or other costs (including attorneys’ fees) incurred in connection with any threatened or pending action, suit or proceeding, whether legal, administrative or investigative, against the Corporation or any of its directors, officers or employees arising out of or relating to a failure or alleged failure of the Nominating Person to comply with, or any breach or alleged breach of, its obligations, agreements or representations under this Section 2.4(c);
(v) in the event that any information included in the Nomination Notice, or any other communication by the Nominating Person (including with respect to any Eligible Holder included in a group), with the Corporation, its stockholders or any other person in connection with the nomination or election ceases to be true and accurate in all material respects (or due to a subsequent development omits a material fact necessary to make the statements made not misleading), or that the Nominating Person (including any Eligible Holder included in a group) has failed to continue to satisfy the eligibility requirements described in Section 2.4(c)(3), to promptly (and in any event within 48 hours of discovering such misstatement or omission) notify the Corporation and any other recipient of such communication of the misstatement or omission in such previously provided information and of the information that is required to correct the misstatement or omission; and
(D) An executed agreement, in a form deemed satisfactory by the board of directors, by the Proxy Access Nominee:
(i) to provide to the Corporation such other information, including completion of the Corporation’s director questionnaire, as it may reasonably request;
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(ii) that the Proxy Access Nominee has read and agrees, if elected, to serve as a member of the board of directors, to adhere to the Corporation’s Code of Conduct and any other Corporation policies and guidelines applicable to directors; and
(iii) that the Proxy Access Nominee is not and will not become a party to any agreement, arrangement or understanding with any person or entity as to how the Proxy Access Nominee would vote or act on any issue or question as a director.
The information and documents required by this Section 2.4(c)(4) shall be (i) provided with respect to and executed by each Eligible Holder or, in the case of a Nominating Person comprised of a group of Eligible Holders, each Eligible Holder in that group; and (ii) provided with respect to the persons specified in Instruction 1 to Items 6(c) and (d) of Schedule 14N (or any successor item) in the case of a Nominating Person or Eligible Holder that is an entity. The Nomination Notice shall be deemed submitted on the date on which all the information and documents referred to in this Section 2.4(c)(4) (other than such information and documents contemplated to be provided after the date the Nomination Notice is provided) have been delivered to or, if sent by mail, received by a Secretary of the Corporation.
(5) Exceptions.
(A) Notwithstanding anything to the contrary contained in this Section 2.4(c), the Corporation may omit from its proxy statement any Proxy Access Nominee and any information concerning such Proxy Access Nominee (including a Nominating Person’s statement in support) and no vote on such Proxy Access Nominee will occur (notwithstanding that proxies in respect of such vote may have been received by the Corporation), and the Nominating Person may not, after the last day on which a Nomination Notice would be timely, cure in any way any defect preventing the nomination of the Proxy Access Nominee, if:
(i) the Corporation receives a Timely Notice pursuant to Section 2.4(a)(2) of these By-Laws that any stockholder intends to nominate a candidate for director at the annual meeting;
(ii) if another person is engaging in a “solicitation” within the meaning of Rule 14a-1(l) under the Exchange Act in support of the election of any individual as a director at the applicable annual meeting of stockholders other than a nominee of the board of directors and other than as permitted by this Section 2.4(c);
(iii) the Nominating Person or the designated Eligible Holder that is authorized to act on behalf of the Nominating Person, as applicable, or any qualified representative thereof, does not appear at the annual meeting of stockholders to present the nomination submitted pursuant to this Section 2.4(c) or the Nominating Person withdraws its nomination;
(iv) the board of directors determines that such Proxy Access Nominee’s nomination or election to the board of directors would result in the
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Corporation violating or failing to be in compliance with the Corporation’s By-Laws or Certificate of Incorporation or any applicable law, rule or regulation to which the Corporation is subject, including any rules or regulations of any stock exchange on which the Corporation’s securities are traded;
(v) the Proxy Access Nominee was nominated for election to the board of directors pursuant to this Section 2.4(c) at one of the Corporation’s two preceding annual meetings of stockholders and either (A) withdrew or became ineligible or (B) received a vote of less than twenty percent of the shares of stock entitled to vote for such Proxy Access Nominee;
(vi) the Proxy Access Nominee is an officer or director of a competitor, as defined for purposes of Section 8 of the Clayton Antitrust Act of 1914, as amended; or
(vii) the Corporation is notified, or the board of directors determines, that a Nominating Person has failed to continue to satisfy the eligibility requirements described in Section 2.4(c)(3) any of the representations and warranties made in the Nomination Notice cease to be true and accurate in all material respects (or omit a material fact necessary to make the statement not misleading), the Proxy Access Nominee becomes unwilling or unable to serve on the board of directors or any material violation or breach occurs of the obligations, agreements, representations or warranties of the Nominating Person or the Proxy Access Nominee under this Section 2.4(c).
(B) Notwithstanding anything to the contrary contained in this Section 2.4(c), the Corporation may omit from its proxy statement, or may supplement or correct, any information, including all or any portion of the statement in support of the Proxy Access Nominee included in the Nomination Notice, if the board of directors determines that:
(i) such information is not true in all material respects or omits a material statement necessary to make the statements made not misleading;
(ii) such information directly or indirectly impugns character, integrity or personal reputation of, or directly or indirectly makes charges concerning improper, illegal or immoral conduct or associations, without factual foundation, with respect to any person; or
(iii) the inclusion of such information in the proxy statement would otherwise violate the Securities and Exchange Commission proxy rules or any other applicable law, rule or regulation.
(d) General.
(1) Only such persons who are nominated in accordance with the provisions of these By-Laws shall be eligible for election and to serve as directors and only such business shall be conducted at an annual meeting of stockholders or special meeting of stockholders as shall have been brought before the meeting in accordance with the provisions of these By-Laws or in accordance with Rule 14a-8 under the Exchange Act. The board of directors or a
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designated committee thereof shall have the power to determine whether a nomination or any business proposed to be brought before the annual meeting of stockholders or special meeting stockholders was made in accordance with the provisions of these By-Laws. If neither the board of directors nor such designated committee makes a determination as to whether any nomination or other stockholder proposal was made in accordance with the provisions of these By-Laws, the person presiding over the annual meeting of stockholders or special meeting of stockholders shall have the power and duty to determine whether the nomination or other stockholder proposal was made in accordance with the provisions of these By-Laws. If the board of directors or a designated committee thereof or the person presiding over the meeting, as applicable, determines that nomination or other stockholder proposal was not made in accordance with the provisions of these By-Laws, such nomination or other stockholder proposal shall be disregarded and shall not be presented for action at the annual meeting of stockholders or special meeting of stockholders.
(2) Except as otherwise required by law and Section 2.4(c) of these By-Laws, nothing in this Section 2.4 shall obligate the Corporation or the board of directors to include in any proxy statement or other stockholder communication distributed on behalf of the Corporation or the board of directors information with respect to any nominee for director or any other matter of business submitted by a stockholder.
(3) Notwithstanding the provisions of this Section 2.4, if the stockholder (or a qualified representative of the stockholder) does not appear at the annual meeting of stockholders or special meeting of stockholders to present a nomination or any business proposed by such stockholder, such nomination or business shall be disregarded, notwithstanding that proxies in respect of such vote may have been received by the Corporation. For purposes of this Section 2.4, to be considered a qualified representative of the proposing stockholder, a person must be authorized by a written instrument executed by such stockholder or an electronic transmission delivered by such stockholder to act for such stockholder as proxy at the annual meeting of stockholders or special meeting of stockholders, and such person must produce such written instrument or electronic transmission, or a reliable reproduction of the written instrument or electronic transmission, to the person presiding over the meeting of stockholders.
(4) Notwithstanding the foregoing provisions of these By-Laws, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in these By-Laws.
(5) Notwithstanding anything in this Article II to the contrary, in the event that the number of directors to be elected to the board of directors is enlarged pursuant to Section 2.7 and there is no Public Announcement naming all of the nominees for director or specifying the size of the increased board of directors made by the Corporation at least ten (10) days before the last day a stockholder may deliver a notice of nomination that qualifies as a Timely Notice under Section 2.4(a)(2), a stockholder’s notice required by these By-Laws shall still be considered a Timely Notice, but only with respect to nominees for any new positions created by such increase, if it shall be received by the secretary of the Corporation not later than the close of business on the tenth (10th) day following the day on which such Public Announcement is first made by the Corporation.
(6) Nothing in these By-Laws shall be deemed to affect any rights of (i) stockholders to have proposals included in the Corporation’s proxy statement pursuant to Rule 14a-8 (or any successor rule), as applicable, under the Exchange Act and, to the extent required by such rule, have such proposals considered and voted on at an annual meeting of
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stockholders or (ii) the holders of any series of preferred stock to elect directors under specified circumstances.
Section 2.5. Election and Term of Office.
(a) Commencing at the annual meeting of the stockholders in 1995, the directors shall be divided into three classes, designated Class I, Class II and Class III. Each class shall consist, as nearly as may be possible, of one third of the number of directors constituting the entire Board of Directors. At the annual meeting of the stockholders held in 1995, Class I directors shall be elected for a one year term, Class II directors shall be elected for a two year term, and Class III directors shall be elected for a three year term, and in each case until their successors are duly elected and qualified. Commencing in 1996, at each annual meeting of the stockholders, successors to the class of directors whose terms expire at that annual meeting of stockholders shall be elected by stockholders for a three year term and until their successors are duly elected and qualified. If the number of directors constituting the entire Board of Directors shall be changed, the increase or decrease shall be apportioned among the classes so as to maintain the number of directors in each class as nearly equal as possible.
(b) Any director elected to fill a vacancy resulting from an increase in any class or from the removal from office, death, disability, resignation or disqualification of a director or other cause shall hold office for the remaining term of the class to which such director is elected. No decrease in the size of the Board of Directors shall have the effect of removing or shortening the term of any incumbent director.
(c) Whenever the holders of any series of preferred stock issued pursuant to the provisions of the Certificate of Incorporation of the Corporation shall have the right, voting as a separate class, to elect directors, the election, term of office, filling of vacancies and other terms of such directorships shall be governed by the terms of the Certificate of Incorporation applicable to such series, as the case may be, and such directorships shall not be divided into classes unless expressly so provided therein.
Section 2.6. Vacancies. Any vacancy in the board of directors, however occurring, including a vacancy resulting from the enlargement of the board of directors, may be filled in the manner provided in the Certificate of Incorporation of the corporation.
Section 2.7. Enlargement of the Board. The board of directors may be enlarged in the manner provided in the Certificate of Incorporation of the corporation.
Section 2.8. Resignation. Any director may resign by delivering or mailing postage prepaid a written resignation to the corporation at its principal office or to the chairman of the board of directors, chief executive officer, secretary or assistant secretary, if any. Such resignation shall be effective upon receipt unless it is specified to be effective at some other time or upon the happening of some other event.
Section 2.9. Removal. A director, whether elected by the stockholders or directors, may be removed from office in the manner provided in the Certificate of Incorporation of the corporation.
Section 2.10 Meetings. Regular meetings of the board of directors may be held without call or notice at such times and such places within or without the State of Delaware as the Board may, from time to time, determine, provided that notice of the first regular meeting following any such determination shall be given to directors absent from such determination. A regular meeting of the board of directors shall be held without notice immediately after, and at the same place as, the annual meeting of the stockholders or the special meeting of the stockholders held in place of such annual meeting, unless a quorum of the directors is not then present. Special meetings of the board of directors may be held at any time and at any place designated in the call of the meeting when called by the
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chairman of the board, or one or more directors. Members of the board of directors or any committee elected thereby may participate in a meeting of such board or committee by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other at the same time, and participation by such means shall constitute presence in person at the meeting.
Section 2.11. Notice of Meeting. It shall be sufficient notice to a director to send notice by mail at least seventy-two (72) hours before the meeting addressed to such person at his usual or last known business or residence address or to give notice to such person in person, by telephone or by electronic mail or other electronic transmission (as permitted by applicable law) at least twenty-four (24) hours before the meeting. Notice shall be given by the secretary, assistant secretary, if any, or by the officer or directors calling the meeting. The requirement of notice to any director may be waived by a written waiver of notice, executed by such person before or after the meeting or meetings, and filed with the records of the meeting, or by attendance at the meeting without protesting prior thereto or at its commencement the lack of notice. A notice or waiver of notice of a directors’ meeting need not specify the purposes of the meeting.
Section 2.12. Agenda. Any lawful business may be transacted at a meeting of the board of directors, notwithstanding the fact that the nature of the business may not have been specified in the notice or waiver of notice of the meeting.
Section 2.13. Quorum. At any meeting of the board of directors, a majority of the directors then in office shall constitute a quorum for the transaction of business. Any meeting may be adjourned by a majority of the votes cast upon the question, whether or not a quorum is present, and the meeting may be held as adjourned without further notice.
Section 2.14. Action at Meeting. Any motion adopted by vote of the majority of the directors present at a meeting at which a quorum is present shall be the act of the board of directors, except where a different vote is required by law, by the Certificate of Incorporation or by these By-Laws. Members of the Board may participate in any meeting of the Board by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in any meeting pursuant to this provision shall constitute presence in person at such meeting. The assent in writing or by electronic transmission of any director to any vote or action of the directors taken at any meeting, whether or not a quorum was present and whether or not the director had or waived notice of the meeting, shall have the same effect as if the director so assenting was present at such meeting and voted in favor of such vote or action.
Section 2.15. Action Without Meeting. Any action by the directors may be taken without a meeting if all of the directors consent to the action in writing or by electronic transmission, and the consents in writing or by electronic transmission are subsequently filed with the records of the directors’ meetings. Such filing shall be in paper form if the records are maintained in paper form and shall be in electronic form if the records are maintained in electronic form. Such consent shall be treated for all purposes as a vote of the directors at a meeting.
Section 2.16. Committees. The board of directors may, by the affirmative vote of a majority of the directors then in office, appoint an executive committee or other committees consisting of one or more directors and may by vote delegate to any such committee some or all of their powers except those which by law, the Certificate of Incorporation or these By-Laws they may not delegate. Unless the board of directors shall otherwise provide, any such committee may make rules for the conduct of its business, but unless otherwise provided by the board of directors or such rules, its meetings shall be called, notice given or waived, its business conducted or its action taken as nearly as may be in the same manner as is provided in these By-Laws with respect to meetings or for the conduct of business
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or the taking of actions by the board of directors. The board of directors shall have power at any time to fill vacancies in, change the membership of, or discharge any such committee at any time. The board of directors shall have power to rescind any action of any committee, but no such rescission shall have retroactive effect.
ARTICLE III.
Officers
Section 3.1. Enumeration. The officers shall consist of a chairman of the board of directors, chief executive officer, chief financial officer, a secretary and such other officers and agents (including president, one or more additional vice-presidents, assistant treasurers and assistant secretaries), as the board of directors may, in their discretion, determine.
Section 3.2. Election. The chairman of the board of directors, chief executive officer, chief financial officer and secretary shall be elected annually by the directors at their first meeting following the annual meeting of the stockholders or any special meeting held in lieu of the annual meeting. Other officers may be chosen by the directors at such meeting or at any other meeting.
Section 3.3. Qualification. An officer may, but need not, be a director or stockholder. Any two or more offices may be held by the same person. Any officer may be required by the directors to give bond for the faithful performance of his duties to the corporation in such amount and with such sureties as the directors may determine. The premiums for such bonds may be paid by the corporation.
Section 3.4. Tenure. Except as otherwise provided by the Certificate of Incorporation or these By-Laws, the term of office of each officer shall be for one year or until his successor is elected and qualified or until his earlier resignation or removal.
Section 3.5. Removal. Any officer may be removed from office, with or without cause, by the affirmative vote of a majority of the directors then in office.
Section 3.6. Resignation. Any officer may resign by delivering or mailing postage prepaid a written resignation to the corporation at its principal office or to the chairman of the board of directors, chief executive officer, secretary, or assistant secretary, if any, and such resignation shall be effective upon receipt unless it is specified to be effective at some other time or upon the happening of some event.
Section 3.7. Vacancies. A vacancy in any office arising from any cause may be filled for the unexpired portion of the term by the board of directors.
Section 3.8. Chairman of the Board. The chairman of the board of directors shall have such duties and powers as are commonly incident to such office and such other duties and powers as the board of directors may from time to time determine. He shall preside, when present, at all meetings of the board of directors. If so elected by the board of directors, the chairman of the board of directors may also serve as chief executive officer of the corporation.
Section 3.9. Chief Executive Officer. The chief executive officer shall, subject to the direction of the board of directors, have general supervision and control of the corporation’s business and shall have such powers and duties as are commonly incident to such office.
Except as otherwise voted by the board of directors, the chief executive officer shall preside at all meetings of the stockholders, and shall preside at meetings of the board of directors if the chairman of the board is not present at such meetings.
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Section 3.10. President. The president shall have such powers and shall perform such duties as the board of directors may from time to time designate. The president shall serve as the chief executive officer of the corporation if he shall be so elected by the board of directors.
Section 3.11. Chief Financial Officer. The chief financial officer shall have such powers and perform such duties as the board of directors, the chairman, the chief executive officer, the president or a vice chairman of the board of directors may from time to time prescribe which may include, without limitation, responsibility for strategic planning, corporate finance, control, tax and auditing and shall perform such other duties as may be prescribed by these By-Laws.
Section 3.12. Secretary and Assistant Secretaries. The secretary shall record, or cause to be recorded, all proceedings of the meetings of the stockholders and directors (including committees thereof) in the book of records of this corporation. The record books shall be open at reasonable times to the inspection of any stockholder, director, or officer. The secretary shall notify the stockholders and directors, when required by law or by these By-Laws, of their respective meetings, and shall perform such other duties as the directors and stockholders may from time to time prescribe. The secretary shall have the custody and charge of the corporate seal, and shall affix the seal of the corporation to all instruments requiring such seal, and shall certify under the corporate seal the proceedings of the directors and of the stockholders, when required. In the absence of the secretary at any such meeting, a temporary secretary shall be chosen who shall record the proceedings of the meeting in the aforesaid books.
Assistant secretaries, if any, shall have such powers and perform such duties as the board of directors may from time to time designate.
Section 3.13. Other Powers and Duties. Subject to these By-Laws and to such limitations as the board of directors may from time to time prescribe, the officers of the corporation shall each have such powers and duties as generally pertain to then- respective offices, as well as such powers and duties as from time to time may be conferred by the board of directors.
ARTICLE IV.
Capital Stock
Section 4.1. Stock Certificates. Each stockholder shall be entitled to a certificate representing the number of shares of the capital stock of the corporation owned by such person in such form as shall, in conformity to law, be prescribed from time to time by the board of directors. Each certificate shall be signed by the chairman of the board of directors, the president or any vice-president and by the secretary, assistant secretary or treasurer or assistant treasurer, or such other officers designated by the board of directors from time to time as permitted by law, shall bear the seal of the corporation, and shall express on its face its number, date of issue, class, the number of shares for which, and the name of the person to whom, it is issued. The corporate seal and any or all of the signatures of corporation officers may be facsimile if the stock certificate is manually counter-signed by an authorized person on behalf of a transfer agent or registrar other than the corporation or its employee.
If an officer, transfer agent or registrar who has signed, or whose facsimile signature has been placed on, a certificate shall have ceased to be such before the certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent or registrar at the time of its issue.
Section 4.2. Transfer of Shares. Title to a certificate of stock and to the shares represented thereby shall be transferred only on the books of the corporation by delivery to the corporation or its transfer agent of the certificate properly endorsed, or by delivery of the certificate accompanied by a written assignment of the same, or a properly executed written power of attorney to sell, assign or
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transfer the same or the shares represented thereby. Upon surrender of a certificate for the shares being transferred, a new certificate or certificates shall be issued according to the interests of the parties.
Section 4.3. Record Holders. Except as otherwise may be required by law, by the Certificate of Incorporation or by these By-Laws, the corporation shall be entitled to treat the record holder of stock as shown on its books as the owner of such stock for all purposes, including the payment of dividends and the right to vote with respect thereto, regardless of any transfer, pledge or other disposition of such stock, until the shares have been transferred on the books of the corporation in accordance with the requirements of these By-Laws.
It shall be the duty of each stockholder to notify the corporation of his post office address.
Section 4.4. Record Date. In order that the corporation may determine the stockholders entitled to receive notice of or to vote at any meeting of stockholders or any adjournments thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the board of directors may fix, in advance, a record date, which shall not be more than sixty days prior to any other action. In such case only stockholders of record on such record date shall be so entitled notwithstanding any transfer of stock on the books of the corporation after the record date.
If no record date is fixed: (i) the record date for determining stockholders entitled to receive notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held; (ii) the record date for determining stockholders entitled to express consent to corporate action in writing without a meeting, when no prior action by the board of directors is necessary, shall be the day on which the first written consent is expressed; and (iii) the record date for determining stockholders for any other purpose shall be at the close of business on the day on which the board of directors adopts the resolution relating thereto.
Section 4.5. Transfer Agent and Registrar for Shares of Corporation. The board of directors may appoint a transfer agent and a registrar of the certificates of stock of the corporation. Any transfer agent so appointed shall maintain, among other records, a stockholders’ ledger, setting forth the names and addresses of the holders of all issued shares of stock of the corporation, the number of shares held by each, the certificate numbers representing such shares, and the date of issue of the certificates representing such shares. Any registrar so appointed shall maintain, among other records, a share register, setting forth the total number of shares of each class of shares which the corporation is authorized to issue and the total number of shares actually issued. The stockholders’ ledger and the share register are hereby identified as the stock transfer books of the corporation; but as between the stockholders’ ledger and the share register, the names and addresses of stockholders, as they appear on the stockholders’ ledger maintained by the transfer agent shall be the official list of stockholders of record of the corporation. The name and address of each stockholder of record, as they appear upon the stockholders’ ledger, shall be conclusive evidence of who are the stockholders entitled to receive notice of the meetings of stockholders, to vote at such meetings, to examine a complete list of the stockholders entitled to vote at meetings, and to own, enjoy and exercise any other property or rights deriving from such shares against the corporation. Stockholders, but not the corporation, its directors, officers, agents or attorneys, shall be responsible for notifying the transfer agent, in writing, of any changes in their names or addresses from time to time, and failure to do so will relieve the corporation, its other stockholders, directors, officers, agents and attorneys, and its transfer agent and registrar, of liability for failure to direct notices or other documents, or pay over or transfer dividends or other
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property or rights, to a name or address other than the name and address appearing in the stockholders’ ledger maintained by the transfer agent.
Section 4.6. Loss of Certificates. In case of the loss, destruction or mutilation of a certificate of stock, a replacement certificate may be issued in place thereof upon such terms as the board of directors may prescribe, including, in the discretion of the board of directors, a requirement of bond and indemnity to the corporation.
Section 4.7. Restrictions on Transfer. Every certificate for shares of stock which are subject to any restriction on transfer, whether pursuant to the Certificate of Incorporation, the By- laws or any agreement to which the corporation is a party, shall have the fact of the restriction noted conspicuously on the certificate and shall also set forth on the face or back either the full text of the restriction or a statement that the corporation will furnish a copy to the holder of such certificate upon written request and without charge.
Section 4.8. Multiple Classes of Stock. The amount and classes of the capital stock and the par value, if any, of the shares, shall be as fixed in the Certificate of Incorporation. At all times when there are two or more classes of stock, the several classes of stock shall conform to the description and the terms and have the respective preferences, voting powers, restrictions and qualifications set forth in the Certificate of Incorporation and these By-Laws. Every certificate issued when the corporation is authorized to issue more than one class or series of stock shall set forth on its face or back either (i) the full text of the preferences, voting powers, qualifications and special and relative rights of the shares of each class and series authorized to be issued, or (ii) a statement of the existence of such preferences, powers, qualifications and rights, and a statement that the corporation will furnish a copy thereof to the holder of such certificate upon written request and without charge.
ARTICLE V.
Dividends
Section 5.1. Declaration of Dividends. Except as otherwise required by law or by the Certificate of Incorporation, the board of directors may, in its discretion, declare what, if any, dividends shall be paid from the surplus or from the net profits of the corporation upon the stock of the corporation; provided, however, that no dividend shall be declared or paid the payment of which would diminish the amount of the paid-in capital of the corporation. Dividends may be paid in cash, in property, in shares of the corporation’s stock, or in any combination thereof.
Dividends shall be payable upon such dates as the board of directors may designate.
Section 5.2. Reserves. Before the payment of any dividend and before making any distribution of profits, the board of directors, from time to time and in its absolute discretion, shall have power to set aside out of the surplus or net profits of the corporation such sum or sums as the board of directors deems proper and sufficient as a reserve fund to meet contingencies or for such other purpose as the board of directors shall deem to be in the best interests of the corporation, and the board of directors may modify or abolish any such reserve.
ARTICLE VI.
Powers of Officers to Contract with the Corporation
Any and all of the directors and officers of the corporation, notwithstanding their official relations to it, may enter into and perform any contract or agreement of any nature between the corporation and themselves, or any and all of the individuals from time to time constituting the board of directors of the corporation, or any firm or corporation in which any such director may be interested, directly or indirectly, whether such individual, firm or corporation thus contracting with the corporation shall
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thereby derive personal or corporate profits or benefits or otherwise; provided, that (i) the material facts of such interest are disclosed or are known to the board of directors or committee thereof which authorizes such contract or agreement; (ii) if the material facts as to such person’s relationship or interest are disclosed or are known to the stockholders entitled to vote thereon, and the contract is specifically approved in good faith by a vote or the stockholders; or (iii) the contract or agreement is fair as to the corporation as of the time it is authorized, approved or ratified by the board of directors, a committee thereof, or the stockholders. Any director of the corporation who is interested in any transaction as aforesaid may nevertheless be counted in determining the existence of a quorum at any meeting of the board of directors which shall authorize or ratify any such transaction. This Article shall not be construed to invalidate any contract or other transaction which would otherwise be valid under the common or statutory law applicable thereto.
ARTICLE VII.
Indemnification
Section 7.1. Definitions. For purposes of this Article VII the following terms shall have the meanings indicated:
(a) “Code of Conduct” means the corporation’s Code of Conduct for Directors, Officers and Employees as in effect from time to time.
(b) “Corporate Status” describes the status of a person who is or was a director, officer, employee, agent, trustee or fiduciary of the Corporation or of any other corporation, partnership, joint venture, trust, employee benefit plan or other Enterprise which such person is or was serving at the express written request of the corporation.
(c) “Court” means tile Court of Chancery of the State of Delaware, the court in which the Proceeding in respect of which indemnification is sought by a Covered Person shall have been brought or is pending, or another court having subject jurisdiction and personal jurisdiction over the parties.
(d) “Covered Person” means a person who is a present or former director or officer of the corporation and shall include such person’s legal representatives, heirs, executors and administrators.
(e) “Disinterested Director” means a director of the corporation who is not and was not a party to the Proceeding in respect of which indemnification is sought by a Covered Person.
(f) “Enterprise” shall mean the corporation and any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise of which a Covered Person is or was serving at the express written request of the corporation as a director, officer, employee, agent, trustee or fiduciary.
(g) “Expenses” shall include, without limitation, all reasonable attorneys’ fees, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating or being or preparing to be a witness in a Proceeding.
(h) “Good Faith” shall mean a Covered Person having acted in good faith and in a manner such Covered Person reasonably believed to be in or not opposed to the best interests of the corporation or, in the case of an Enterprise which is an employee benefit plan, the best interests of the participants or beneficiaries of said plan, as the case may be, and, with respect to any Proceeding which is criminal in nature, having had no reasonable cause to believe such Covered Person’s conduct was unlawful.
(i) “Independent Counsel” means a law firm, or a member of a law firm, that is experienced in matters of corporation law and may include law firms or members thereof that are regularly retained
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by the corporation but not any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the standards of professional conduct then prevailing and applicable to such counsel, would have a conflict of interest in representing either the corporation or Covered Person in an action to determine Covered Person’s rights under this Article.
(j) “Proceeding” includes any action, suit, arbitration, alternate dispute resolution mechanism, investigation (including any internal corporate investigation), administrative hearing or any other actual, threatened or completed proceeding whether civil, criminal, administrative or investigative, other than one initiated by the Covered Person. For purposes of the foregoing sentence, a “Proceeding” shall not be deemed to have been initiated by the Covered Person where such Covered Person seeks to enforce such Covered Person’s rights under this Article.
Section 7.2. Right to Indemnification in General.
(a) Covered Persons. In connection with any Proceeding, the corporation shall indemnify, and advance Expenses, to each Covered Person as provided in this Article and to the fullest extent permitted by applicable law in effect on the date hereof and to such greater extent as applicable law may hereafter from time to time permit. The indemnification provisions in this Article shall be deemed to be a contract between the corporation and each Covered Person who serves in any such Corporate Status at any time while these provisions as well as the relevant provisions of the Delaware General Corporation Law are in effect and any repeat or modification thereof shall not affect any right or obligation then existing with respect to any state of facts then or previously existing or any Proceeding previously or thereafter brought or threatened based in whole or in part upon any such state of facts. Such a “contract right” may not be modified retroactively without the consent of such Covered Person.
(b) Employees and Agents. The corporation may, to the extent authorized from time to time by the board of directors, grant indemnification and the advancement of Expenses to any employee or agent of the corporation to the fullest extent of the provisions of this Article with respect to the indemnification and advancement of Expenses of Covered Person.
Section 7.3 Proceedings Other Than Proceedings by or in the Right of the Corporation.
Each Covered Person shall be entitled to the rights of indemnification provided in this Section 7.3 if, by reason of such Covered Person’s Corporate Status, such Covered Person is, or is threatened to be made, a party to or is otherwise involved in any Proceeding, other than a Proceeding by or in the right of the corporation. Each Covered Person shall be indemnified against Expenses, judgments, penalties, fines and amounts paid in settlements, actually and reasonably incurred by such Covered Person or on such Covered Person’s behalf in connection with such Proceeding or any claim, issue or matter therein, if such Covered Person did not violate the corporation’s Code of Conduct and acted in Good Faith. Notwithstanding the foregoing, if such Covered Person shall have been found to have violated the corporation’s Code of Conduct then in effect, the corporation may, to the extent authorized by the board of directors, indemnify such Covered Person against Expenses, judgments, penalties, fines and amounts paid in settlement, actually and reasonably incurred by such Covered Person or on such Covered Person’s behalf.
Section 7.4. Proceedings by or in the Right of the Corporation.
(a) Each Covered Person shall be entitled to the rights of indemnification provided in this Section 7.4 if, by reason of such Covered Person’s Corporate Status, such Covered Person is, or is threatened to be made, a party to or is otherwise involved in any Proceeding brought by or in the right of the corporation to procure a judgment in its favor. Such Covered Person shall be indemnified against
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Expenses, judgments, penalties, and amounts paid in settlement, actually and reasonably incurred by such Covered Person or on such Covered Person’s behalf in connection with such Proceeding if such Covered Person acted in Good Faith. Notwithstanding the foregoing, no such indemnification shall be made in respect of any claim, issue or matter in such Proceeding as to which such Covered Person shall have been adjudged to be liable to the corporation if applicable law prohibits such indemnification; provided, however, that, if applicable law so permits, indemnification shall nevertheless be made by the corporation in such event if and only to the extent that the Court which is considering the matter shall determine.
(b) Notwithstanding any provision to the contrary in this Section, if the board of directors, Independent Counsel or the stockholders, as the case may be, making the determination with respect to indemnification as provided under Section 7.9 hereof, or the Court considering the matter determines that the act or omission which forms the basis for the claim which is the subject of the Proceeding violated the corporation’s Code of Conduct then in effect, then, notwithstanding that fact, the corporation may, to the extent authorized by the board of directors, indemnify such Covered Person against all Expenses, judgments, penalties and amounts paid in settlement, actually and reasonably incurred by such Covered Person or on such Covered Person’s behalf in connection with such proceeding if such Covered Person acted in Good Faith.
Section 7.5. Indemnification of a Party Who is Wholly or Partly Successful.
Notwithstanding any other provision of this Article, to the extent that a Covered Person is, by reason of such Covered Person’s Corporate Status, a party to or is otherwise involved in and is successful, on the merits or otherwise, in any Proceeding, such Covered Person shall be indemnified to the maximum extent permitted by law, against all Expenses, judgments, penalties, fines, and amounts paid in settlement, actually and reasonably incurred by such Covered Person or on such Covered Person’s behalf in connection therewith. If such Covered Person is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the corporation shall indemnify such Covered Person to the maximum extent permitted by law, against all Expenses, judgments, penalties, fines, and amounts paid in settlement, actually and reasonably incurred by such Covered Person or on such Covered Person’s behalf in connection with each successfully resolved claim, issue or matter. For purposes of this Section 7.5 and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.
Section 7.6. Indemnification for Expenses of a Witness. Notwithstanding any other provision of this Article, to the extent that a Covered Person is, by reason of such Covered Person’s Corporate Status, a witness in any Proceeding, such Covered Person shall be indemnified against all Expenses actually and reasonably incurred by such Covered Person or on such Covered Persons behalf in connection therewith.
Section 7.7. Advancement of Expenses. Notwithstanding any provision to the contrary in this Article, the corporation (acting through the chairman of the board, president, executive vice president or any vice president of the corporation) shall advance all reasonable Expenses which, by reason of a Covered Persons Corporate Status, were incurred by or on behalf of such Covered Person in connection with any Proceeding, within twenty (20) days after the receipt by the corporation of a statement or statements from such Covered Person requesting such advance or advances, whether prior to or after final disposition of such Proceeding. Such statement or statements shall reasonably evidence the Expenses incurred by the Covered Person and shall include or be preceded or accompanied by an undertaking by or on behalf of the Covered Person to repay any Expenses if it
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shall ultimately be determined that such Covered Person is not entitled to be indemnified against such Expenses. Any advance and undertakings to repay pursuant to this Section 7.7 shall be unsecured and interest free. Advancement of Expenses pursuant to this Section 7.7 shall not require approval of the board of directors or the stockholders of the corporation, or of any other person or body. The Secretary of the corporation shall promptly advise the Board in writing of the request for advancement of Expenses, of the amount and other details of the advance and of the undertaking to make repayment pursuant to this Section 7.7.
Section 7.8. Notification and Defense of Claim.
Promptly after receipt by a Covered Person of notice of the commencement of any Proceeding, such Covered Person shall, if a claim is to be made against the corporation under this Article, notify the corporation of the commencement of the Proceeding. The omission so to notify the corporation will not relieve it from any liability which it may have to such Covered Person otherwise than under this Article. With respect to any such Proceedings to which such Covered Person notifies the corporation:
(a) The corporation will be entitled to participate in the defense at its own expense.
(b) Except as otherwise provided below, the corporation jointly with any other
indemnifying party similarly notified will be entitled to assume the defense with counsel reasonably satisfactory to the Covered Person. After notice from the corporation to the Covered Person of its election to assume the defense of a suit, the corporation will not be liable to the Covered Person under this Article for any legal or other expenses subsequently incurred by the Covered Person in connection with the defense of the Proceeding other than reasonable costs of investigation or as otherwise provided below. The Covered Person shall have the right to employ his own counsel in such Proceeding but the fees and expenses of such counsel incurred after notice from the corporation of its assumption of the defense shall be at the expense of the Covered Person unless (i) the employment of counsel by the Covered Person has been authorized by the corporation, (ii) the Covered Person shall have concluded reasonably that there may be a conflict of interest between the corporation and the Covered Person in the conduct of the defense of such action and such conclusion is confirmed in writing by the corporation’s outside counsel regularly employed by it in connection with corporate matters, or (iii) the corporation shall not in fact have employed counsel to assume the defense of such Proceeding, in each of which cases the fees and expenses of counsel shall be at the expense of the corporation. The corporation shall not be entitled to assume the defense of any Proceeding brought by or in the right of the corporation or as to which the Covered Person shall have made the conclusion provided for in (ii) above and such conclusion shall have been so confirmed by the corporation’s said outside counsel.
(c) Notwithstanding any provision of this Article to the contrary, the corporation shall not be liable to indemnify the Covered Person under this Article for any amounts paid in settlement of any Proceeding or claim effected without its written consent. The corporation shall not settle any Proceeding or claim in any manner which would impose any penalty, limitation or disqualification of the Covered Person for any purpose without such Covered Person’s written consent. Neither the corporation nor the Covered Person will unreasonably withhold their consent to any proposed settlement.
(d) If it is determined that the Covered Person is entitled to indemnification not covered by defense of the claim afforded under subparagraph (b) above, payment to the Covered Person of the additional amounts to be indemnified shall be made within ten (10) days after determination.
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Section 7.9. Method of Determination.
A determination (if required by applicable law in the specific case) with respect to a Covered Person’s entitlement to indemnification shall be made (a) by the board of directors by a majority vote of a quorum consisting of Disinterested Directors, or (b) in the event that a quorum of the Board consisting of Disinterested Directors is not obtainable or, even if obtainable, such quorum of Disinterested Directors so directs, by Independent Counsel in a written opinion to the board of directors, a copy of which shall be delivered to the Covered Person seeking indemnification, or (c) by the holders of a majority of the votes of the outstanding stock at the time entitled to vote on matters other than the election or removal of directors, voting as a single class, including the stock of the Covered Person seeking indemnification.
Section 7.10. Presumptions and Effect of Certain Proceedings.
(a) Burden of Proof. In making a determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such determination shall presume that the Covered Person is entitled to indemnification under this Article if such Covered Person has submitted a request for indemnification including such documentation and information as is reasonably available to such Covered Person and is reasonably necessary to determine whether and to what extent such Covered Person is entitled to indemnification and the corporation shall have the burden of proof to overcome that presumption in connection with the making by any person, persons or entity of any determination contrary to that presumption.
(b) Effect of Other Proceedings. The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of guilty or of nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this Article) of itself adversely affect the right of a Covered Person to indemnification or create a presumption that a Covered Person violated the corporation’s Code of Conduct or did not act in Good Faith.
(c) Actions of Others. The knowledge and/or actions, or failure to act, of any director, officer, employee, agent, trustee or fiduciary of the Enterprise shall not be imputed to a Covered Person for purposes of determining the right to indemnification under this Article.
Section 7.11. Non-Exclusivity. The rights of indemnification and to receive advancement of Expenses as provided by this Article shall not be deemed exclusive of any other rights to which a Covered Person may at any time be entitled under applicable law, the Certificate of Incorporation, these By-Laws, any agreement, a vote of stockholders or a resolution of the board of directors, or otherwise. No amendment, alteration, rescission or replacement of this Article or any provision hereof shall be effective as to a Covered Person with respect to any action taken or omitted by such Covered Person in such Covered Person’s Corporate Status prior to such amendment, alteration, rescission or replacement.
Section 7.12. Insurance. The corporation may maintain, at its expense, an insurance policy or policies to protect itself and any Covered Person, officer, employee or agent of the corporation or another Enterprise against liability arising out of this Article or otherwise, whether or not the corporation would have the power to indemnify any such person against such liability under the Delaware General Corporation Law.
Section 7.13. No Duplicative Payment. The corporation shall not be liable under this Article to make any payment of amounts otherwise indemnifiable hereunder if and to the extent that a Covered Person has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.
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Section 7.14. Severability. If any provision or provisions of this Article shall be held to be invalid, illegal or unenforceable for any reason whatsoever:
(a) the validity, legality and enforceability of the remaining provisions of this Article (including without limitation, each portion of any Section of this Article containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby; and
(b) to the fullest extent possible, the provisions of this Article (including, without limitation, each portion of any Section of this Article containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable.
ARTICLE VIII.
Miscellaneous Provisions
Section 8.1. Certificate of Incorporation. All references in these By-Laws to the Certificate of Incorporation shall be deemed to refer to the Certificate of Incorporation of the corporation, as amended and in effect from time to time.
Section 8.2. Fiscal Year. Except as from time to time otherwise provided by the board of directors, the fiscal year of the corporation shall end on the 31st day of March of each year.
Section 8.3. Corporate Seal. The board of directors shall have the power to adopt and alter the seal of the corporation.
Section 8.4. Execution of Instruments. All deeds, leases, transfers, contracts, bonds, notes, and other obligations authorized to be executed by an officer of the corporation on its behalf shall be signed by the chairman of the board of directors, the president or the treasurer except as the board of directors may generally or in particular cases otherwise determine.
Section 8.5. Voting of Securities. Unless the board of directors otherwise provides, the chairman of the board of directors, the president or the treasurer may waive notice of and act on behalf of this corporation, or appoint another person or persons to act as proxy or attorney in fact for this corporation with or without discretionary power and/or power of substitution, at any meeting of stockholders or shareholders of any other corporation or organization, any of whose securities are held by this corporation.
Section 8.6. Evidence of Authority. A certificate by the secretary or any assistant secretary as to any action taken by the stockholders, directors or any officer or representative of the corporation shall, as to all persons who rely thereon in good faith, be conclusive evidence of such action. The exercise of any power which by law, by the Certificate of Incorporation, or by these By-Laws, or under any vote of the stockholders or the board of directors, may be exercised by an officer of the corporation only in the event of absence of another officer or any other contingency shall bind the corporation in favor of anyone relying thereon in good faith, whether or not such absence or contingency existed.
Section 8.7. Corporate Records. The original, or attested copies, of the Certificate of Incorporation, By-Laws, records of all meetings of the incorporators and stockholders, and the stock transfer books (which shall contain the names of all stockholders and the record address and the amount of stock held by each) shall be kept in Delaware at the principal office of the corporation, or at an office of the corporation, or at an office of its transfer agent or of the secretary or of the assistant secretary, if any. Said copies and records need not all be kept in the same office. They shall be
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available at all reasonable times to inspection of any stockholder for any purpose but not to secure a list of stockholders for the purpose of selling said list or copies thereof or for using the same for a purpose other than in the interest of the applicant, as a stockholder, relative to the affairs of the corporation.
Section 8.8. Charitable Contributions. The board of directors from time to time may authorize contributions to be made by the corporation in such amounts as it may determine to be reasonable to corporations, trusts, funds or foundations organized and operated exclusively for charitable, scientific or educational purposes, no part of the net earning of which inures to the private benefit of any stockholder or individual.
ARTICLE IX.
Amendments
Section 9.1. Amendment by Stockholders. Prior to the issuance of stock, these By-Laws may be amended, altered or repealed by the incorporator(s) by majority vote. After stock has been issued, these By-Laws may be amended altered or repeated by the stockholders at any annual or special meeting by vote of a majority of all shares outstanding and entitled to vote, except that where the effect of the amendment would be to reduce any voting requirement otherwise required by law, the Certificate of Incorporation or these By-Laws, such amendment shall require the vote that would have been required by such provision. Notice and a copy of any proposal to amend these By-Laws must be included in the notice of meeting of stockholders at which action is taken upon such amendment.
Section 9.2. Amendment by Board of Directors. These By-Laws may be amended or altered by the board of directors at a meeting duly called for the purpose by majority vote of the directors then in office, except that directors shall not amend the By-Laws in a manner which:
(a) changes the stockholder voting requirements for any action;
(b) alters or abolishes any preferential right or right of redemption applicable to a class or series of stock with shares already outstanding;
(c) alters the provisions of this Article IX hereof; or
(d) permits the board of directors to take any action which under law, the Certificate of Incorporation, or these By-Laws is required to be taken by the stockholders.
Any amendment of these By-Laws by the board of directors may be altered or repealed by the stockholders at any annual or special meeting of stockholders.
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Exhibit 10.1
Grantee: |
[Executive Officer Name] |
Target Number of Restricted Stock Units: |
[Target Number] |
Date of Grant: |
[Grant Date] |
Vesting: Three Year Cliff (vesting on the third anniversary of the Date of Grant, subject to the satisfaction of performance-based and time-based vesting conditions) |
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ABIOMED, Inc.
Second Amended & Restated 2015 Omnibus Incentive Plan
Performance-Based Restricted Stock Unit Agreement (Section 16 and Other Officers)
This agreement (this “Agreement”) evidences the grant of restricted stock units (the “Restricted Stock Units”) by ABIOMED, Inc. (the “Corporation”) to the individual named above (the “Grantee”) pursuant to and subject to the terms of the ABIOMED, Inc. Second Amended and Restated 2015 Omnibus Incentive Plan (as amended from time to time, the “Plan”), which is incorporated herein by reference.
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(i) Performance Goals. The performance goals for the Performance Period are certain non-financial milestones set forth in Appendix B (the “Milestone Metrics”).
(ii) Earned Percentage. Except as provided in Section 3(e) hereof, the Restricted Stock Units shall be earned based on the number of Milestone Metrics achieved during the Performance Period and the associated percentage shown in the table below (the “Earned Percentage”).
[Redacted]
[Redacted]
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(i) Restricted Stock Units Are Not Assumed or Replaced. If, upon the occurrence of a Change of Control, the Restricted Stock Units are not converted, assumed, or replaced by a successor with an economically equivalent award, then 150% of the Target Number of Restricted Stock Units shall become immediately earned and fully vested upon the closing of the Change of Control; provided, however, that the Compensation Committee (as constituted immediately prior to the applicable Change of Control), in its discretion, may elect to provide that between 150% and 200% of the Target Number of Restricted Stock Units shall become immediately earned and fully vested upon the closing of the Change of Control. Any accelerated vesting pursuant to this Section 3(e) upon a Change of Control is subject to the Grantee having remained in continuous Employment from the Date of Grant through the closing of such Change of Control. The Restricted Stock Units shall be settled within fifteen (15) days following the closing of the Change of Control.
(ii) Restricted Stock Units Are Assumed or Replaced. If, upon the occurrence of a Change of Control, the Restricted Stock Units are converted, assumed, or replaced by a successor with an economically equivalent award, then any unvested and unearned Restricted Stock Units shall become immediately earned and fully vested upon the Grantee’s termination of Employment by the Corporation without Cause or by the Grantee’s resignation for Good Reason, in each case, on or before the second anniversary of the Change of Control, assuming achievement of the performance goals at 150% of the Target Number; provided, however, the Compensation Committee (as constituted immediately prior to the applicable Change of Control), in its discretion, may elect to provide that between 150% and 200% of the Target Number of Restricted Stock Units shall be immediately and fully vested upon such termination of Employment. The Restricted Stock Units will be settled within thirty (30) days following such termination of Employment.
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b. In furtherance of the foregoing and as a condition of eligibility for the Award granted hereunder, and participation in the Plan, the Grantee understands and agrees that if the Grantee’s Employment with the Corporation terminates for any reason (whether voluntary or involuntary), and the Grantee engages in any Prohibited Activity (as defined below) within two (2) years after such termination, the Grantee will repay to the Corporation the economic value of the Award, which results or resulted from the Grantee’s exercise at any time after the date which is twelve (12) months prior to the date of the Grantee’s termination of Employment. For purposes hereof, the economic value to be repaid is the market price per share at the time of exercise or vesting over the exercise price (if any) per share, multiplied by the number of shares so exercised or vested, without regard to any subsequent market price decrease or increase, reduced by any statutory income taxes paid by the Grantee with respect to income recognized in connection with any exercise or vesting. For purposes hereof, the economic value with respect to any Award exercised or vested during a period in which the Grantee is an employee of the Corporation shall be presumed to be the amount reported as employment income by the Corporation. For any period after the Grantee has ceased to be an employee of the Corporation, the economic value shall be calculated by using the high and low price on the date of exercise and vesting, unless there is actual price information available.
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(i) hires or attempts to hire or assist any other person in hiring or attempting to hire any employee of the Corporation; or
(ii) encourages or assists any other person in encouraging any director, officer, employee, agent, consultant, or any other person affiliated with the Corporation to terminate or alter the Grantee’s or its relationship with the Corporation; or
(iii) encourages or assists any other person in encouraging any customer or supplier of the Corporation to terminate or alter its relationship with the Corporation; or
(iv) sells or markets or assists any other person in selling or marketing any product or service that competes, directly or indirectly, with any product or service manufactured, sold, or under development by the Corporation at the time the Grantee’s Employment with the Corporation is terminated (to include the Corporation’s service of providing specialized clinical education and training to healthcare professionals in the interventional cardiology space); or
(v) researches, develops or manufactures or assists any other person in researching, developing or manufacturing any product or service that competes with any product or service conceived, manufactured, sold, or under development by the Corporation at the time the Grantee’s Employment with the Corporation is terminated.
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Executed as of the 26th day of May, 2022.
Corporation: ABIOMED, INC.
By: __________________________________ Name:
Title:
Grantee: By: __________________________________ Name:
Address:
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APPENDIX A
PEER GROUP
[Redacted]
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APPENDIX B
MILESTONE METRICS
[Redacted]
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APPENDIX C
RESTRICTED BUSINESSES
[Redacted]
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Exhibit 10.2
Grantee: |
[Executive Officer Name] |
Number of Restricted Stock Units: |
[Aggregate Amount] |
Date of Grant: |
[Grant Date] |
ABIOMED, Inc.
Second Amended & Restated 2015 Omnibus Incentive Plan
Time-Based Restricted Stock Unit Agreement (Section 16 and Other Officers)
This agreement (this “Agreement”) evidences the grant of restricted stock units (the “Restricted Stock Units”) by ABIOMED, Inc. (the “Corporation”) to the individual named above (the “Grantee”) pursuant to and subject to the terms of the ABIOMED, Inc. Second Amended and Restated 2015 Omnibus Incentive Plan (as amended from time to time, the “Plan”), which is incorporated herein by reference.
1. Grant of Restricted Stock Units. On the date of grant set forth above (the “Date of Grant”), the Corporation granted to the Grantee an award (the “Award”) consisting of the right to receive, on the terms provided herein and in the Plan, one (1) share of Stock with respect to each Restricted Stock Unit forming part of the Award, in each case, subject to adjustment pursuant to Section 7 of the Plan in respect of transactions occurring after the date hereof.
2. Meaning of Certain Terms. Each initially capitalized term used but not separately defined herein has the meaning assigned to such term in the Plan. In addition, the following terms shall have the meanings set forth below:
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3. Vesting. The term “vest” as used herein with respect to any Restricted Stock Unit means the lapsing of the restrictions described herein with respect to such Restricted Stock Unit.
(i) Restricted Stock Units Are Not Assumed or Replaced. If, upon the occurrence of a Change of Control, the Restricted Stock Units are not converted, assumed, or replaced by a successor with an economically equivalent award, then any unvested Restricted Stock Units shall become immediately and fully vested upon the closing of the Change of Control. Any accelerated vesting pursuant to this Section 3(b) upon a Change of Control is subject to the Grantee having remained in continuous Employment from the Date of Grant through the closing of such Change of Control. The Restricted Stock Units shall be settled within fifteen (15) days following the closing of the Change of Control.
(ii) Restricted Stock Units Are Assumed or Replaced. If, upon the occurrence of a Change of Control, the Restricted Stock Units are converted, assumed, or replaced by a successor with an economically equivalent award, then any unvested Restricted Stock Units shall become immediately and fully vested upon the Grantee’s termination of Employment by the Corporation without Cause or by the Grantee’s resignation for Good Reason, in each case, on or before the second anniversary of the Change of Control. The Restricted Stock Units will be settled within thirty (30) days following such termination of Employment.
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6. No Rights of Shareholder; Voting; Dividends. The Grantee shall have the rights of a shareholder with respect to a share of Stock subject to the Award only at such time, if any, as such share is actually delivered under the Award. Without limiting the generality of the foregoing and for the avoidance of doubt, the Grantee shall not be entitled to vote any share of Stock subject to the Award or to receive or be credited with any dividend or other distribution declared and payable on any such share unless and until such share has been actually delivered hereunder and is held by the Grantee on the record date for such vote or dividend (or other distribution), as the case may be.
7. Certain Tax Matters.
a. The Grantee expressly acknowledges and agrees that the Grantee’s rights hereunder, including the right to be issued shares of Stock upon the vesting of the Restricted Stock Units (or any portion thereof), are subject to the Grantee’s promptly paying, or in respect of any later requirement of withholding being liable promptly to pay at such time as such withholdings are due, to the Corporation in cash (or by such other means as may be acceptable to the Administrator in its discretion) all taxes required to be withheld, if any (the “Withholding Obligation”).
b. By accepting this Award, the Grantee hereby acknowledges that the Corporation will hold back whole shares of Stock otherwise deliverable pursuant to this Agreement, as applicable, having a Fair Market Value sufficient to satisfy the Withholding Obligation (but not in excess of the applicable minimum statutory withholding obligations or such greater amount that would not result in adverse accounting consequences to the Corporation).
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8. Forfeiture; Recovery of Compensation.
b. In furtherance of the foregoing and as a condition of eligibility for the Award granted hereunder, and participation in the Plan, the Grantee understands and agrees that if the Grantee’s Employment with the Corporation terminates for any reason (whether voluntary or involuntary), and the Grantee engages in any Prohibited Activity (as defined below) within two (2) years after such termination, the Grantee will repay to the Corporation the economic value of the Award, which results or resulted from the Grantee’s exercise at any time after the date which is twelve (12) months prior to the date of the Grantee’s termination of Employment. For purposes hereof, the economic value to be repaid is the market price per share at the time of exercise or vesting over the exercise price (if any) per share, multiplied by the number of shares so exercised or vested, without regard to any subsequent market price decrease or increase, reduced by any statutory income taxes paid by the Grantee with respect to income recognized in connection with any exercise or vesting. For purposes hereof, the economic value with respect to any Award exercised or vested during a period in which the Grantee is an employee of the Corporation shall be presumed to be the amount reported as employment income by the Corporation. For any period after the Grantee has ceased to be an employee of the Corporation, the economic value shall be calculated by using the high and
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low price on the date of exercise and vesting, unless there is actual price information available.
(i) hires or attempts to hire or assist any other person in hiring or attempting to hire any employee of the Corporation; or
(ii) encourages or assists any other person in encouraging any director, officer, employee, agent, consultant, or any other person affiliated with the Corporation to terminate or alter the Grantee’s or its relationship with the Corporation; or
(iii) encourages or assists any other person in encouraging any customer or supplier of the Corporation to terminate or alter its relationship with the Corporation; or
(iv) sells or markets or assists any other person in selling or marketing any product or service that competes, directly or indirectly, with any product or service manufactured, sold, or under development by the Corporation at the time the Grantee’s Employment with the Corporation is terminated (to include the Corporation’s service of providing specialized clinical education and training to healthcare professionals in the interventional cardiology space); or
(v) researches, develops or manufactures or assists any other person in researching, developing or manufacturing any product or service that competes with any product or service conceived, manufactured, sold, or under development by the Corporation at the time the Grantee’s Employment with the Corporation is terminated.
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9. Transfer of Award. Neither the Award nor the Restricted Stock Units may be transferred except at death in accordance with Section 6(a)(3) of the Plan.
10. Form S-8 Prospectus. The Grantee acknowledges that the Grantee has received and reviewed a copy of the prospectus required by Part I of Form S-8 relating to shares of Stock that may be issued pursuant to the Award under the Plan.
11. Acknowledgments. By accepting the Award, the Grantee agrees to be bound by, and agrees that the Award is, and the Restricted Stock Units are, subject in all respects to, the terms of the Plan. In the event of any conflict between the terms of this Agreement and the Plan, the terms of the Plan shall control. The Grantee acknowledges that Restricted Stock Units covered by a grant are not intended nor shall be deemed to constitute a wage under any state or federal wage and hour law. The Grantee further acknowledges and agrees that (a) the signature to this Agreement on behalf of the Corporation is an electronic signature that will be treated as an original signature for all purposes hereunder and (b) such electronic signature will be binding against the Corporation and will create a legally binding agreement when this Agreement is electronically accepted by the Grantee.
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Executed as of the 26th day of May, 2022.
Corporation: ABIOMED, INC.
By: __________________________________ Name:
Title:
Grantee: By: __________________________________ Name:
Address:
[Signature Page to Time-Based Restricted Stock Unit Agreement (Executives)]
APPENDIX A
RESTRICTED BUSINESSES
[Redacted]
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Exhibit 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO EXCHANGE ACT RULE 13A-14(A)/15D-14(A), AS ADOPTED
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Michael R. Minogue, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q for the period ended June 30, 2022 of ABIOMED, Inc.
2. Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report;
3. Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such evaluation; and
(d) Disclosed in this Report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: August 4, 2022 |
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/s/ Michael R. Minogue |
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Michael R. Minogue |
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Chairman, President and Chief Executive Officer (Principal Executive Officer) |
Exhibit 31.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO EXCHANGE ACT RULE 13A-14(A)/15D-14(A), AS ADOPTED
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Todd A. Trapp, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q for the period ended June 30, 2022 of ABIOMED, Inc.
2. Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report;
3. Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such evaluation; and
(d) Disclosed in this Report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: August 4, 2022 |
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/s/ TODD A. TRAPP |
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Todd A. Trapp |
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Executive Vice President and Chief Financial Officer (Principal Financial Officer) |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. § 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of ABIOMED, Inc., (the “Company”) for the quarter ended June 30, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned Chairman, President and Chief Executive Officer and Vice President and Chief Financial Officer of the Company, certifies, to the best knowledge and belief of said signatory, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ MICHAEL R. MINOGUE |
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/s/ TODD A. TRAPP |
Michael R. Minogue Chairman, President and Chief Executive Officer (Principal Executive Officer) |
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Todd A. Trapp Executive Vice President and Chief Financial Officer (Principal Financial Officer) |
Date: August 4, 2022 |
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Date: August 4, 2022 |